With a $1000 budget, you can have a real nice system. If you want to stick with clarion, I'd jump to the 835mp which can be had for $220 shipped from thezeb.com which is an authorized clarion dealer.
http://www.thezeb.com/caraudio/clari...receivers.html
I'd spend the bulk of your money on your front speakers, as they will have the most impact on your sound. The factory system is three-way, but a 2-way component system, which consists of a mid and tweeter, will be adequate and save a bit of money. Your e34 accepts 5.25" mids but can accomodate 6.5s if your willing to custom mount them in your kicks. You can either cut a hole in your kicks or simply mount them from behind. For rearfill, you can simply get coaxes or take them out all together to improve your imaging. Think about a concert, the band plays in front of you, and not from behind. Some suggestions,
$150 CDT classics 6.5"
$200 CDT HDs 5.25", both great speakers, which can be described as laid back and smooth.
http://www.thezeb.com/caraudio/CDT_A...omponents.html
If you need rearfill, CDT has their full range two-ways on sale for $45
http://www.thezeb.com/caraudio/CDT_Audio_FullRange.html
Maybe some JL XRs on ebay for around $200
or some Kicker resolutions for around $150 on ebay.
I can give you more suggestions depending on your budget and listening tastes. I have some Image dynamic chameleons that I might sell for around $200 if your interested. Do a search on them as they are pretty highly regarded.
For a sub, try a Phoenix gold Titanium 10" for $69
http://www.cbrstereo.com/Merchant2/m...ry_Code=PGSUBS
I believe the 12" is under a $100 as well. You don't need to be a basshead to enjoy a sub as a small sub can add depth to your music and increase your listening enjoyment.
For amps, a nice four channel can run your whole system. If you want rearfill, you can run it off your headunit.
Phoenix Gold Tantrum 600.4, 75x4, $280
http://www.sounddomain.com/sku/PHOT6004
Kicker 800.4, 100x4, $220 plus shipping
http://cgi.ebay.com/ws/eBayISAPI.dll...&category=4950
Rockford Fosgate Power 551x, $260, (Pass on the punch series from RF)
http://www.thezeb.com/caraudio/rockfordfosgateamps.html
Headunit: $220
Components: $200
Sub: $100
Amp: 280
Total~ $800, need to buy installation accessories, a box for you sub, and pay for actual installation. I recommend you do the bulk of it on your own as most of it is pretty straight forward. Maybe get a shop to run you power and ground wires and possibly your speaker wires and do the rest on your own.
The components will come with a passive crossovers, but the amps will have crossovers as well. You will need to use both to get good sound. On your amp, you will send two channels to your components. You will set the amp crossover for highpass around 80hz, so 80hz and above will be sent to your components. The mid will play from 80hz to around 2-3khz and the tweeter will play the rest. The passive crossover that comes with your components will seperate the frequencies from your mid and tweet.
The other two channels will be sent to your sub. You need to lowpass at around 80hz so 80hz and under will be sent to your sub.
Let me know if you have other questions or need other suggestions on equipment to buy. Also if your open to buying used goods, you can get really high end amps and speakers for pretty cheap.