If you have a place to hide your computer out of site, this project will work for you. If you don’t , the project will still work however you will have to spend a little more money than $400 dollars. As the cost of the case runs up the build.
I started out with a basic case from New Egg HEC 6C28BB8S Black Steel ATX Mid Tower Computer Case for $39.00.

Next up is the power supply, since I do not plan to go nuts with the system, I can afford to go with a small unit, thus saving on the cost. The unit I will go with is the hec HP585D RETAIL 585W ATX12V Power Supply cost is only $29.00
For the motherboard I went with the ASUS M3A76-CM AM2+/AM2 AMD 760G uATX AMD Motherboard, as I have used ASUS in the past, and have never had any problems both with the boards as well as the customer service. Motherboard is only $64.99, I could have gone with a cheaper one or spent a lot more money on a better one, but considering what this board has, and what I intend to do with it, this mades a good fit.It has built in ATI 3000 video card, supports up to 8 gigs of ram DDR2 1066 and has 8 audio channels. To understand why that’s important read ANandTech’s Understanding 8-channel LPCM over HDMI: Why it Matters and Who Supports it
For the processor I picked the AMD Athlon 64 X2 5000 Brisbane 2.6GHz 2 x 512KB L2 Cache Socket AM2 65W Dual-Core for $52.99. Nothing to high tech, but it will have plenty of power to perform as a media center.
Ram is next up on my list and with the prices dropping it made it a very easy to get 4 gigs of DDR2 1066 Corsair for $87.00, if need be I can upgrade latter.
Hard drives are another thing that has really dropped in price, I went with the Samsung spinpoint F1 1TB 7200 RPM SATA cost was only $94.00
Since the CPU needs a cooling fan I went with the basic Cooler Master for $8.99
For the DVD-R I went with the Samsung for $23.99
All of the above items are priced from New Egg, since I believe if you can get it all shipped by the same store at the same time it saves you money, even if you can find some parts a little cheaper at another store. I do not work for New Egg but I have found they do have some of the best prices around..
For the keyboard I went with the BTC wireless keyboard that has a dual mode joystick mouse built in. You can find them at Amazon for $29.99 however I did find a refurbished one at Geeks.com for $14.99 and since New Egg did not carry them, I was going to have to pay for shipping so I shopped around for the best price

For the monitor cable, since most new TV’s have a plug for a monitor cable and you want to be able to place the Case out of the way and hopefully out of site, I will use a 10′extension cable attached to a normal 6′ monitor cable. Price at Geeks.com is $10.99.
Keep in mind since this unit is going to be stored out of sight I also order a 16′ USB extension cable for $7.99.
The last item before we talk about software is the wire for your sound, the cheapest way to do this is going directly from the computer to the back of the TV.Cost for the cable is $3.99.
Total cost for hardware = $413.00 very close to my goal of $400.00 Not bad at all. Keep in mind I did not order a TV turner for the card since my goal is to watch TV shows and not record them. Since by making this, I will be able to pick when I watch something. Prime example is the show 24, love the show, but I am not always near a TV when it’s on. Instead of having to record it, I can wait till the next day and it will be on line, and free for me to legally watch it.
Now the only down side with this is my local news and sports. While some sport shows are shown on line, Football is not, or if it is I have not been able to find the games live. Good news is that with the HD channels, I can still catch the local news and sports just by adding a HD antenna.
For Software, I am using an extra copy of Windows Vista since Netflicks and Microsoft just singed a deal allowing you to have on demand with Vista Media Player, not sure why they did not do so for XP. For those who are comfortable using Linux , you know that you have a great OS that has many types of Media players for you to pick from.