I just destroyed the back wheel on my '96 Norco Team Issue. (high quality bike in its time ... now losing a few teeth) It is a nice bike - it handles really well and the frame is very high quality, but this is yet another thing on my list of necessary upgrades. Here's what it needs:
New front fork - the old marzochi is leaking like crazy and wasn't that great to start with. Candidates include the Tora 308 and Dart 3.
Rear derailleur - this one just got destroyed along with the back wheel and a dozen spokes
Back wheel - The whole thing is trashed. BTW, have you ever had spokes tear right out of the rim before? Once the first one ripped out the others all followed suit. Having seen how it blew, I would replace both wheels before I get a repeat on the front.
It could probably also use a whole new set of cables and a thorough tuneup.
The brakes are great. One other improvement would be a step up from 7 to 8 speeds. Sometimes I top out on the roads ...
I could upgrade all this for maybe 300-400.
OR ... I could look at a new bike. My suspicion is that any bike I would get in the range of 500-800 would not compare with my old bike in many ways.
What do you think? Upgrade/fix the old bike or get an entry/mid level mountain bike?