Here we go....
1st: ATI STILL leads the Image Quality benchmarks and a $60 Radeon 2400 is all you will need. It does in hardware H.264 and VC1. It does a better job than the NVIDIA solutions. Sorry to those who don't like that tidbit, but it is what it is. Check anandtech.com and tomshardware.com for reviews and commentary on the matter.
2nd: The AMD X2 BE-2350 Brisbane is $99 and will be more than enough. To put this in perspective, I have an Intel C2 DUO 6420 for my HTPC, I wish the AMD X2 BE had been around when I put together my system. I would have gotten it instead. Still went with a Radeon vs. Nvidia.
3rd: Samsung is going to be your quietest option. I have NOTHING against Hitachi/WD/Seagate/Maxtor. Samsung is going to be your quietest and coolest running drive. I have HD's from all manufactures going 4-6 years strong.
The recommendations for PSU's have been spot on, everything from Nexus, to Antec, to Silverstone etc...
Please, go to Anandtech.com and do some reading.