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Working within your $500 budget…
It sounds like this project is simple in scope with no great frills.
$300 for a Canon standard definition camera. Specifically Canon because at this dollar level they are the only ones I found with an external microphone jack.
$27 x 2 for lapel microphones from Radio Shack. They are inexpensive and work really well.
$7 for a Y-cord or splitter (Radio Shack) for the two microphone cables to plug into.
$7 for a cable extension from the Y-cord to the microphone jack on the camera.
$10 for a mono to stereo adapter (cable extension will plug into this adapter and the adapter into the camera)
Lastly, Windows Movie Maker to edit. It is a simple program to learn. Can create simple title, captions, audio adjustments, music track overlay, and transitions to fade in and out.
This leaves you with $122. (not counting tax yet to be deducted)
Windows Movie Maker is a great program to cut your teeth on. As much as people will poo-poo it, for simple projects with a small learning curve it’s a great program.
Now… if you want to do a little morepizzazz you can take your remaining ~$100 and purchase Pinnacle 15. Make sure your computer is ABOVE the specs needed. Just meeting the specs will be troublesome. Having cut your teeth on Windows Movie Maker the leap to Pinnalce 15 would be really simple.
There are all kinds of spectacular editing programs, hardware, and bells and whistles out there, but a keen eye can use a simple tool and do wonderful things.