So now it's time to talk software!
First up, you'll want a genuine copy of Windows 7 Home Premium or higher. I recommend buying a
product key here for about $20. They can also give you a download link for the Windows 7 software itself. With a Core i3, you'll want the 64-bit version. You can burn the downloaded Windows 7 software to a DVD, or better yet, just use a 4GB or larger USB stick to make the install nice and zippy
After you've installed, use the drivers CD that comes with your motherboard to install all of the necessary drivers. Once your Ethernet is up and running, connect to the Internet and start Windows update. There will be a TON of updates to install. You don't need to do them all at once. Start with the .net updates first, then the Windows OS updates. Leave the security updated for now. Once you've done the .net and OS updates, you should get a Service Pack 1 update. That's the really important one! But it won't show up right away. You need the .net and OS updates first. Once you've installed Service Pack 1, you'll have a lot fewer updates left. Install whatever is left in the list. Then go and Activate Windows. You will also want to turn off User Account Controls. Not just to avoid the annoying pop up every time you go to install or change something, but also because UAC messes up the frame rate on video output for some reason. Especially 24p output.
You can then make sure you have all the latest drivers from your motherboard manufacturer's website and from Intel.
Now you need some playback software. The
Shark007 Codec Pack ensures that Windows Media Center and Windows Media Player will recognize and playback almost any file type.
You'll still want Blu-ray playback software if you want things like BD-Live and full 3D support though. You can make this easy by buying a Blu-ray drive that comes with playback software. Any retail Blu-ray drive will. And it will usually be either PowerDVD or WinDVD, either of which is fine.
I paid $99 for ArcSoft's TotalMedia Theatre 5, but only because I also have over 100 HD DVD discs that I wanted to be able to backup and play. TMT5 is the only current software that still supports HD DVD! So that's why I went with it. But if you don't have HD DVD discs, any Blu-ray playback software is fine
So now to backup you DVD and Blu-ray discs. The free and easy way is to use the
MakeMKV beta software . It's free while in beta, and it's incredibly powerful. You can "open" any DVD or Blu-ray movie with it and select what parts you want to keep, and what parts you're willing to discard. So you can eliminate all the annoying warnings and trailers. You can take out special features. You can select which language and subtitle tracks to keep. And you end up with MKV files in the end.
You will lose BD-Live and you will lose the disc menu. And 3D can sometimes be a little hinky. So if you want to keep those things, or if you just want to make sure that your backups are perfect 1:1 copies of the original discs with no changes to anything what-so-ever, you can do what I do:
I use
Slysoft's AnyDVD HD to make perfect 1:1 ISO image files of my discs. AnyDVD HD puts a little fox's face icon in your system tray. You just right click on that and select "rip to image". You will get an ISO backup of any CD, DVD, HD DVD or Blu-ray this way. Again, my need for HD DVD support led me to pay for AnyDVD HD. I got it when they had a lifetime license though. Slysoft doesn't offer that anymore, so it might be a bit more expensive for folks these days
In order to play back an ISO file, you need to "mount" the image on a virtual drive. Thankfully, this is free and easy with
Slysoft's Virtual CloneDrive . With ISO backups and Virtual CloneDrive, playback is identical to putting a physical disc into a tray. AnyDVD HD also gives you options to remove certain unwanted parts of the discs prior to the ripping process. But it's not quite as precise as MakeMKV. Still, you can simply play the physical disc with AnyDVD HD running first to make sure it plays the way you want it to, then do the rip to image to get that exact version - certain parts of the disc removed, or completely untouched
So, at this point, you can make your backups and play them back. But I'm sure you also want to be able to go into Windows Media Center, bring up a pretty-looking list of all your movies with nice box art and descriptions. Browse, search, hit play, and enjoy a slick-looking interface!
For all of that, you need metadata and organizational software that integrates with WMC. Luckily, you have two great options!
First up, if you use the method I use of 1:1 ISO backups, then I highly recommend
MyMovies . MyMovies is a HUGE database of basically every disc out there. What makes it terrific for 1:1 ISO backups is that they have an individual listing for each disc, not just each movie. So, for example, if you have the same movie on both DVD and Blu-ray, you can have a separate entry in your collection for each! Or if you have both a regular edition and also a Special edition or Director's Cut or Extended edition or what have you: each version gets its own entry in your collection. It really is exactly like a virtual bookshelf for your movie collection. And with ISO backups, it's super easy. When you mount the ISO file, MyMovies reads that as you having inserted a physical disc. It will read the disc ID and automatically look up the title for you! Then you can add it to your collection right then and there. Couldn't be easier. MyMovies provides box art, specs, full descriptions. It's great. It even has individual country codes so you can add foreign discs. And you can manually edit any of the info as much as you want!
The only tricky bit is that if you want it to all work smoothly within Windows Media Center, you have to "point" MyMovies to where your ISO files are stores. In the MyMovies Collection Manager software, there's a little "disc(s)" icon. You click on that and use the drop down menu to say that the disc is a file. You then point to the file's location on your hard drive or NAS unit. Now, when you hit "Play" in Windows Media Center, MyMovies will automatically look up the location of that movie's "disc" file. It all works seamlessly, and it's exactly what you are asking for: a big, pretty database of all the movies you own (or "backed up" from rental discs

), that you can browse, search, and play back all from one device and one slick interface.
MyMovies does have some extra features that you have to pay to "unlock", such as pretty backdrops for you individual movie title screens, and a number of additional layouts and ways of organizing your collection. The basics are all free though, and totally functional. The "pay to unlock" features really are just cosmetic extras, but you might want them enough to pay for them
The other great metadata option is called
MediaBrowser . It's free. And if you go the MKV or BitTorrented download route, it's probably a better choice than MyMovies. MyMovies is really all geared towards physical discs or ISO files that mimic physical discs. MediaBrowser pulls in its data and listings from TMDb, so it's based just on movie titles, not disc releases. You need to follow MediaBrowser's guidelines for putting each movie file in its own folder, and naming the folders according to their guide. Once you do that though, MediaBrowser automatically brings in all the data and organizes your collection within Windows Media Center! So no "pointing" the software to each individual movie file one be one like in MyMovies. You just show MediaBrowser where all your movie files are kept one time, and it does all the rest! You can manually correct any mistakes it makes after
So that's about it. There are also many plug-ins you can add to Windows Media Center to give it more functionality. It's also a great DVR. If you add an over-the-air HDTV antenna and a tuner (or 2 or 4 or 8

) to your HTPC, you can enjoy pristine broadcast television and record it on your computer! If your cable company supports CableCard, there are also CableCard tuners for PCs, so you can use WMC as your DVR, rather than a TiVo or your cable company's DVR box.
And because it's a full PC, you can, of course, use any online service, go to any website, or install any PC software. You can also make it a full gaming PC if you want to! The Core i3 build I've suggested here is no gaming rig. That was all about the lowest cost. But you could certainly up the budget and build a screaming gaming rig if you wanted to.
Extenders (including the Xbox360) can't play back Blu-ray ISO backups. Nor can DLNA devices. But if you limit the audio to standard Dolby Digital or DTS, they CAN play back MKV files in most cases. And you can always use HandBrake to create file versions for your portable or other devices after using MakeMKV.
There's basically no limits. There can certainly be headaches in the initial setup, and ongoing hassles in keeping it all organized and running smoothly. But there's nothing more versatile, powerful, and slick than a nice HTPC
Hope that helps!