How to install and set up PBX System

I'm trying to set up a small business phone system that adds call transferring and music on hold. There are two lines and five to eight phones. As far as I know, we don't need any Internet connection features - just the normal features of most analog systems but with call transferring within the building and quality sound music playing while callers are on hold.
Most analog systems providing music on hold that I've looked at seem cumbersome in one way or the other. So I'm considering a PBX system if it can be done reasonably inexpensively. I'm wondering if anyone can help me with these questions:
1. Can it be done by connecting to a standard analog or digital phone service? (For example, Verizon phone service)
2. Does everything plug into the standard analog phone receptacles or do we have to run new lines? or rewire the jacks?
3. Based on other postings, I'm considering the Avaya Partner ACS Rel 7.0 system. Can you tell if this system will do what I'm trying to do? (~8 telephones, 2 lines, music on hold, call transfer, no PC connection)
4. Do we need anything other than the PBX server and (~) 8 PBX phones?

Your help is greatly appreciated.
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The Avaya Partner system will do what you ask, although it may be more than you need.
If you go with the Partner, you need the core control unit, the embedded software, and the phones.  Music is provided by connecting up a source (such as an MP3 player - although there are rules against putting copyrighted music onto a PBX hold system).  The Partner offers different versions and module, but is a full business system, including voice mail.  It uses standard "star-based" wiring, with each telephone outlet needing a home-run cable to a central point where the control unit is located.  If your outlets are currently wired separately and tied back into the telephone service point, you might be ok.  Many used Partner systems are available and a 509 control unit is large enough for your needs.  

However, you may want to consider what is called a KSU-less phone system, especially if you are not wired in the star-based method described above.   If the wiring is in series (like many home outlets, all on a common cable run), then these phones will work without rewiring.  Each phone can be plugged into the outlet - the switching intelligence is embedded in the phones without needing a core control unit.  These units are very straightforward to install and use, with decent features -- but it is not a PBX.  One option is the AT&T 964 phones.  You can add music on old with something like the "Intellitouch OHP6500 MP3 Digital Player for Analog KSU Less Telephone System" (can get from Amazon).  Like the Partner, it will connect with standard analog lines from the telco.

ConcentusAuthor Commented:

Thanks for your reply. It's a Huge help. Do you know if the KSU phones are compatible across models and manufacturers? We would like one of the phones to be cordless.
There are manufactures of small systems that have cordless versions, but I don't remember any KSU less phones that did.  For the features to interact correctly you can't mix KSU-less manufacturers (proprietary signalling between phones controls some things line intercom, privacy, etc.).  One really good option is to purchase a wireless headset from Plantronics (like the CS55) and add it to the set - gives you about 300 foot range and is very comfortable for hands-free.  There are other options if this is not ideal - including using a standard two-line wireless phone, but the problem is that the KSU-less phones can not tell if the wireless phone is using the line (or vice-versa).

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ConcentusAuthor Commented:
Thank you for your replies. They were a great help.
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