receiver? high end sound card? or both?

You need a better receiver than a sound card.

Your Receiver should be able to accept:

1 - HDMI connection from your PS3.
2 - SPDIF Input from your DVD Player.
3 - SPDIF Input from your Computer if your Computer has that features.
4 - Some Stereo RCA inputs usually comes with any Receiver.

Make sure you take the speaker into the account.

what sound card do u recommend? and also what receiver? Can i still use the 5.1 speakers that came along with the lcd tv/dvd player bundle? or u suggest buying a new one? if yes, what do u recommend?

Get a Receiver first, hook it up and get a sound cardafter if you're still not satisfied. Onkyo and Denon are good amplifiers with plenty of connection hookups, , X-fi and Azuntech are very good on sound cards. If your not an audiophile enthusias, just work with your budget and your fine.

yea definitely best getting a receiver first and building a system from there however for a decent one its gona cost quite a bit more than your budget. When you say 5.1 speaker bundle do you mean like essentially a dvd player with a built in amp which your speakers plug into? I ask because as some times the speakers can be of average quality so might need to upgrade them.
With a new amp/receiver you could run your ps3 hdmi to your tv and then optical to your amp, your pc either optical or coax to your amp and component video to your tv.
I wouldnt bother with a new sound card unless your mobo is quite old and doesnt have SPDIF out, either optical or co-ax. I have a X-fi fatality pro series sound card which I output to my home theatre system and what a complete waste of money it has been, sound quality over the standard HD onboard audio is hardly note worthy, it has some cool features software wise but hardly worth the price tag.