First off, FOR THE LOVE OF GOD do not put some fucking $100 piece of shit DVD player (much less one with a VCR in it for $100) on a TV like that. I am even more steadfast in this than being anti Bose with sixate. Putting a piece of shit DVD player like that on a TV of the caliber your friend is looking is an offense that should be punishbable by crucifixion. I would say go with a DLP from Samsung or LG to save a little money. 99% of the viewers out there won't be able to see any discernable differences between those at the Mitsubishi. I would take the money she can save there and invest in a good (read: real) DVD player. I would recommend the $1499 DVD-3910 from Denon. This DVD player is basically an upgraded DVD-5900 inside but sells for $500 less than the 5900. For those not familiar with the legendary 5900, it was known as the single best performing DVD player for many years running. It's performance has been surpassed by only one model to date, the DVD-3910. This is the single best performing DVD player available for under $3500. The only thing I would recommend above it is the ultra flagship DVD-5910 from Denon, which gives the best possible DVD picture available until Blu-Ray and HD-DVD models become available. I would be more than happy to explain the intricate details that make the Denon vasly superior to that Toshiba "progressive scan" unit. Just ask. Just please, don't choke a TV of that caliber with a fucking Best Buy special DVD player.
I won't spend much time on a VCR, because frankly, the technology hasn't changed in 10 years. Pick up a $200 S-VHS deck from JVC (the only manufacturer that makes a VCR worth a fuck anymore) and call it good.
MP3 player: Of course you could just do something simple like an iPod. It's kinda hackish with a system of this caliber though.
Cambridge Audio is coming out with a CD/HDD player soon which is going to kick much ass. It shares the chassis with their Azur series CD players, but comes with a 160 GB HDD inside. It can rip to MP3, WMA (bleh), WAV, and uncompressed PCM. It can play most everything else, including my beloved AAC. It has an ethernet interface so it can be networked and accessible from any other machine on the network, 3 USB ports which can be used to make it wireless, PS/2 keyboard and mouse ports for manual title entry, it accesses the Gracenote and Muze databases for title and album art lookup, digital coax and optical outputs, and multiple video out options. Here is a comparison of the Cambridge and its competitors:
Speakers. This is sort of subjective if she wants to keep them small. Nothing is going to be life alteringly good if she wants them "Bose" small. There are some nice systems from KEF, Mirage, Athena, Vienna Acoustics, and JMLab. You can get a lot in the $800 to $1500 range.
Turntable. If you ask me, the Music Hall mmf-5 is the best bang for the buck table available. It usually sells for around $600. There are less expensive tables out there of course, and a decent one will run you around $350. I would also recommend she set aside a few hundred bucks for cables too.