For $500-$650 I think you can find a RebelXT+Kit lens now, great camera, have one myself.
To learn DSLR cameras, you want to experiment-- A LOT. Don't give up, it takes a lot of time, you'll get some really nice shots and some really bad shots, it just takes a lot of time. You have to learn the camera, the settings--basically getting comfortable with things. From there you start to expand, new lenses, accesories (tripods, flashes, lighting, etc), it just takes time. Theres a lot of features on DSLR cameras and its really fun to use. Eventually you start to fall into categories of what you like to take shots of (cars, nature, macro, landscapes, urban life, etc). I recommend checking out, http://photography-on-the.net/
its a great place, huge forum, lots of activities, and members ranging from newbies to pro's, so everyone can offer advice, really friendly community.
I should warn you, just like modding it can become an expensive hobby, you start off with an expensive camera, and then you start to spend even more money on it. You may start off with inexpensive relatively efficient lenses, but as you advance "L" lenses can cost anywhere from $600-$2,000 =] I just spent $250 on my tripod, I'm looking to purchase a Sigma 10-20MM UWA (~$450), as well as an external flash unit Speedlite 430EX (~$230), so you have to start weighing out your options lol..
Another thing to warn you about, when you start carrying a big camera around people start to look at you funny, but usually the pictures you capture clear out any doubt of why you would be foolish enough to carry such a huge camera in public.