like hopeless said, the lens is a big deal. I'd ABSOLUTELY SKIP THE KIT LENS. If you're going nikon or canon, buy yourself the 50mm f/1.8 lens. it'll run you 100 bucks and teach you way more about photography because you'll get to play with the aperture a lot more (open that lens all the way up and you'll get a really narrow depth of field compared to the widest open on the kit lens).
Camera: to start with and learn on, xsi is a great camera. if you're thinking nikon, i'd get a d40 if you want to stay in the same price range (skip the d60, its not better than the d40).
i generally recommend the d90 for nikon as a starter if you're a little more flexible with budget (same sensor as the d300, cropped sensor, but i think thats a nonissue for most beginners, especially if you're shooting for posting online).
between nikon/canon -- just pick one. this is basically the same sort of question as "ruby or python".
i've bought happily off craigslist, but if you're even slightly concerned that the seller is sketchy, skip it, unless you know what to look for. better to pay 50 bucks more as insurance that you're getting quality early on. B&H photo is a great place to buy online and they'll match any reputable vendor (usually they're the bst though).
read kenrockwell.com. he reviews a ton of cameras and generally has a higher concentration of quality information in one place than you can find elsewhere.