sure, you can go out and get a media center pc already configured and good to go–but what’s the fun in that? also, there’s a ton of other components, cases and set ups you might want to cook up, so here’s an excellent guide on making your own media center pc.
If you use linux to power the whole thing, you can greatly reduce costs.
In that case you can use that old 600mhz mother board you had lying around still, and you save ~300$ on software. In total (if you buy all hardware) a dedicated mp3 player (with remote control and LCD screen) can be built for under $500.
more on: http://www.mythtv.org/ and http://freevo.sourceforge.net/
i’ve been wanting to do something like this for a long time. the only problem i’ve run into is finding an affordable video card that will output to tv without blurring the text. i couldn’t even read my file names without looking at the monitor.
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An Xbox running Xbox Media Center is also a viable option. That’s what I use. :)