The XT and Xti are basically the same. The difference really isn't worth the extra $$. Honestly I would go for the XT. Like I said earlier you could get that new with lens for 479. Body only would be cheaper. Nikon probably has something equal or better than the rebel in that price range. Both brands are very good.
Lighting:
There are basically 2 kinds of lighting systems you could go with and both need to be diffused (soft).
1. Continuous lighting (aka Hot Lights). The lights are always on....so what you see is what you get. They would be great for still life photography but not great for portrait work because they do put out alot of heat.
You can find Hot lights at your nearest hardware store........work lights. halogen or the cheap clamp on lights will work for this.....again they will need to be diffused and you will need to adjust your white balance. I started out with hot lights. I bought the cheapest I could find which was around $10 I think.
I moved into portrait photography and quickly dumped the hot lights and bought a strobe.
2. Strobe lighting. strobe lighting is easy on the model but a bit more difficult on the photographer because you don't see your results until after the pic is taken. Strobes are off (except for modeling light) until triggered to fire by one of the following: PC sync, wireless transmitter, on camera flash.
Strobe prices are pretty high but they are well worth the investment. Avoid alot of the "strobe kits" on
ebay. most of them are junk. stay with name brand stuff like alienbees.
http://www.alienbees.com
Britek isnt bad (i own one) but Bees are better ( i am ordering one).
You can easily make a light diffusion panel yourself. Make the frame out of PVC and stretch translucent ripstop fabric over it. Place it between your lights and your subject.
here's an example
http://www.diyphotography.net/homestudio/blz/soft-light-panel-frame
i too am on a budget so i can relate to your situation.
alot of the accessories that you will need can be made.
I have made my own reflectors, diffusion panels. saved myself money that way.
other sources for cheap accessories. just watch what you are buying.
http://stores.ebay.com/2DreamMaker
http://stores.ebay.com/studio4less
Good luck and Let me know if I can help you further.
