These are all things I've thought about and actually need the least advice on

Do need help with choosing the right RO/DI system however. Someone said I wouldn't need one if I downgrade to a 20gal? Regardless, I would rather buy the unit upfront than buy water all the time.
Rock is a top priority, cost of salt is easy, more worried about a functional tank than a crazy amount of livestock and I don't plan on corals either. Plenty of people have mentioned testing supplies, and I have an enormous amount of miscellaneous equipment not currently in use.
Honestly, my biggest question marks right now are the RO/DI unit and filtration. Also wondering if I should downgrade to my 20 long, but I know nothing about the pros vs. cons
You are taking a very reasonable approach to setting up this tank.
many on here seem to be discouraging due to perceived cost, but based on what your goals are you will be fine.
your proposed upfront budget is very reasonable for what you want to do, but one of the big money sucks in this hobby is constantly upgrading. This hobby is extremely addictive and you will want to upgrade your tank size and all the lower cost equipment you buy sooner rather than later (especially since you are already an aquarist).
in order to get the most bang for your buck, and future proof your setup as much as possible, here’s what I would suggest:
Go with your 40b
Get a HOB overflow, or figure out if the back of your 40b is non tempered and drill it for an external overflow
Get a 20l sump baffle kit off eBay and set your 20l up as a sump
Get 30-40lbs dry rock (petco had a killer deal on a 40lb box recently)
Get an additional 5 lbs or so of live rock from an established tank
Get 20lbs or so of dry sand
This is your base system, it will have enough space, water volume and flexibility to last you for quite a while.
now for equipment:
Buy as much used as possible
Chinese stuff from
Amazon or eBay is totally fine (most aquarium equipment is made in China anyways)
500-700gph return pump
Sounds like you already have a 200 watt heater
A single (for now) wave maker in the 2000gph range
A single (for now) inexpensive led light that will support corals.
you don’t need a skimmer yet, but if you find a good deal on a used one go ahead and grab it.
for RODI try to find a used system, or get a BRS 5 stage when they go on sale. In the meantime you can get DI or distilled water from a local filtered water store.
Mix your own saltwater using instant ocean.
Get this up and running, use some bacteria in a bottle to help the live rock seed the rest of the tank.
For ancillary/support equipment you will need at a minimum:
Some way to measure salinity, temperature and nitrate (at a minimum, more testing equipment can be added later)
A way to mix and heat fresh saltwater (brute can and a long piece of PVC for manual mixing works on the cheap)
A way to get fresh saltwater into your tank (transfer pump, or siphon into smaller buckets and dump in)
Standard aquarium accessories that you probably already have: glass cleaners, gravel vacuum, lots of 5G buckets etc.
You can totally get started with a setup like this and be happy for a long time. And don’t shy away from soft corals, they are not much more difficult than fish.