I decided to build a system from the ground up for my HTPC.
I used a Shuttle ss51g from microdirect.co.uk for the basis of this.
The shuttle's are a bare bones system where you add a cpu, ram, hd and an AGP if you require DVI.
The shuttles come with an on board audio card with has SPDIF out. It also has onboard graphics which, for non DVI users, is pretty good. They cost around £210.
They are pretty small (8w*10h*16d inches), have a quiet fan option. Gas cooling for the processor as opposed to a fan and it looks pretty cool.
I ended up using a 1.7G Celeron, 256M PC2700 memory, Radeon 7500, 40 G H/d and a pioneer Dvd (which is easy to flash).
The sytem works well, dvd's play flawlessly with no loss of lip sync or noticeable layer change as I had on my old sony 725.
The complete system cost around £400. I bought a wireless k/b and mouse for under £30 from malpin and that also has proved to be excellent
I'm using Win2000 as my main i/f, with powerstrip for setting the screen resolution. DVD genie and Powerdvd sort out the playing side. The SPDIF o/p plumbs into my yamaha amp and that's about it.