Like stated, both the EOS XTi and Nikon D80 are excellent cameras. But, there are important differences between them.
The Nikon D80 is an excellent camera. It is sturdy, rock-solid, has great images, great range, and has a massive selection of lenes, going back to the late 1970s. You can even use some from the 1950s, if they are machine altered.
The EOS XTi has excellent image quality. That's about all I'll give it. The largest downfall, besides the overall build and quality, are the lenses. The kit lenses are awful, so if you get this camera, look to spend more money for a good lens. The higher priced lenses are not nearly as good, either, so look at something in the L series. These lenses are the best Canon has to offer, but these are also well into the thousands of dollars. If you want quality, this is the way you should go. Even the prized 50mm f1.8 is not good with Canon. Optically, it is nowhere near the Nikon version, or the Pentax 50mm f1.4.
With that said, I recommed the Nikon D80. Body alone, this is $1000, well worth the price. For a lens, I suggest the great18-200mm VR, but this $750, $200 over budget. For some other lenses, I would say look into some fixed prime lenses. Like the 35mm f2.0 or the 50mm f1.4, or the 85mm f1.8. A good zoom for under $500 would be the 18-135mm. There are many more lenses as well. You can see them all at:
http://www.nikonusa.com/template.php?cat=1&grp=5
Hope this helped.