Craig, you have received a great set of responses here. Having just started myself, the best way i can contribute is to run you through my set up.. Let me start by saying that if you think you are going to like this, and it sounds like you already do, just save your money and buy the best you can afford.. if you buy the cheapest tool out there, then you will either replace it or upgrade it and end up spending more $$..
for my grinder, i had a porter cable 3x21 belt sander that i clamped in a vice vertically. it works ok, but it does not really have a way mounting a tool rest for square grinding.. I was given a harbor freight 1x30 as well (they are under 60$), and between the two i can grind, but im still very limited. Ill be spending more for a real grinder as soon as I have the cash.
I made my forge from an old Charcoal Chimney.. the kind you fill up with charcoal and light paper stuffed under it. I cut some holes in the sides, and placed forms where I wanted ports for the torch heads, and used old tennis ball cans for the chamber form.. filled it with refractory cement and blammo.. 50 dollar forge.. I have to move the steel around in it alot to keep the heat even, but it seems to reach the right temps..
like most everybody on here, my first blades were made with files and sandpaper.. like the others said it was sloooow going.. but very rewarding. there is nothing like the feeling of using a knife that you made for what you intended to make it for.
anyways good luck!