With a budget of £500 you will need a number of items. Firstly a camcorder, next a tripod (essential for producing professional looking videos as handheld shots will not do), a bag to carry the camcorder in and some editing software. So that narrows down the type of camcorder you can buy, I would suggest a Mini DV tape based camcorder possibly a Canon model, a JVC model or a Panasonic model (there is a 3CCD model still available from none other than Argos at £199.99) or maybe try Jessops if there is a store near you.

The Canon models I would look at are MD216 and MD235 or the JVC GRD820. This will leave you with enough to purchase the other bits and pieces you are looking for including editing software, personally I would suggest Adobe Premiere Elements 4 (around £60 to £65), a tripod possibly a TP323 or TP327 again from Jessops; a camera bag can be purchased from any photography shop for around £25 (you don't need anything fancy or have some company's name on the front of it), just make sure it is big enough to hold the camcorder, at least two batteries, two tapes (2 hours of recording), and a cleaning cloth or lens tissues for the front lens element if you are outdoors and it starts to rain. A soft cloth is also useful to have to wipe spots of rain, dust or finger marks off the camcorder body.

Check out those camcorder models to see if any of them offer what you are looking for, if you find one that does then that's that sorted, if you don't then post again. Other items such as a Firewire cable and Firewire connection on your computer setup will come later. And no you don't need one of those white umbrellas, only used in studio still photography.

__________________
Better than a poke in the eye with a pointy stick any day...