#1
We are using a Pyle Pro PDKM7 at the moment and I am wondering if we can get a better sound without spending too much more. Of course if it is not worth getting a new set until I can get a bigger budget that is fine too. So budget is $400.

We are using a kick, snare, rack tom, floor tom, and 2 OH condenser mics for the cymbals. I was thinking about just adding onto what we have with the DMK57-52. But I would like to upgrade our OH condensers as well.
#2
I wouldn't buy a set, per-se, single mics are better when you're upgrading from a kit. Replace the weakest links first and keep upgrading as your budget allows.

I have an Audio-Technica PRO25 Kick Mic which is an INSANELY clear and punchy budget mic:
http://www.amazon.com/gp/product/B0002YLDZK

You can't really go wrong with a 57 on the snare (while on a budget)

As far as overheads, you'd have ~$200 in the budget after those other two mics. That leaves you with the Rode M5 pair as a viable option. Looking for used mics will really open up your options.

You really don't need isolated mics for the toms if you have good enough overheads and your drummer is consistent.

For reference, I recorded these drums in my (auralex treated) home (apartment) studio with:

- PRO25 on kick
- 57 on Snare
- Oktava MK319 pair overhead (got them used for $99 each)

https://www.youtube.com/watch?v=VkV9cW9fRlQ

So that's my $400 drum mic setup for reference!
Telecaster - SG - Jaguar
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Apogee Duet 2 - Ableton Suite