Don't ditch a Hammer for a $500 bike! A steel Rocky or Kona is a slick bike that deserves another chance to hit the trails, it's so much nicer to ride than a $500 aluminum bone crusher. Any shifting issues can be quickly ironed out by your LBS for a few bucks. Worst case, you need new deraillers, cassette, chain and chain rings. Go with a mix of a bunch of LX level gear and you'll have a bike that shifts like new for a couple of hundred bucks. If the crank is screwed and not just the rings, you can get a new Deore crank with BB for just over $100.
Keep that Hammer going! It's totally worth keeping a quality frame going, much more so than going with a 'throw away' $500 bike.