Based on what you're saying you're using it for, you have way more hardware in that machine than is needed for HTPC work. An x6 processor is certainly not needed for playback. A humble dualcore will do it. You won't notice a difference between the two for playback. Now, if you're looking to encode
things, you will appreciate having an x6 CPU on there (such as ripping things, encoding to different formats, etc). So if you plan on also encoding/ripping lots of content often, then keep the x6, if not, get a dualcore instead for $60.
Don't even buy a discrete GPU. That onboard HD42xx will decode bluray just fine. It will handle everything just fine. Save that money. It will enhance nothing here.
Do you want small form factor? You have selected a large case. You could get a smaller setup for a mATX setup to reduce foot print and not have a bulky computer case that is obvious sticking out for a HTPC. Lots of options here for mATX cases that are very sleek looking and smaller. Check out the ones that look more like non-computers. Example: HTPC Case
Here's a suggestion (based on you being in CA):
nMEDIAPC HTPC case
Dualcore Regor 3ghz CPU
$300ish shipped in Canada. Will playback 1080p, bluray, etc no problems. Has optical output and HDMI of course.
If encoding a lot, again, the x6 is fine to go to if you're doing that. If not, stick to a dualcore for HTPC, it won't do anything more with a better CPU except use more wattage.
-- Now, you mentioned audio. How awesome do you want your audio to get? You can get some computer speakers or some powered book shelves. Or you can move up to a receiver and some loud speakers. Personally, after having great audio, you never want low end audio again. I would get a receiver and some nice bookshelves. Or at the very least, get some good powered bookshelves such as the M-Audio AV 40's. Do not buy some computer-intended-speakers if you can help it. But again, I highly recommend a basic receiver with optical in. Attach speakers as you can buy more and more and more.
If you can get a receiver, get two of these, they're on sale right now (and are fantastic for this cost): Polk Monitor 50's
$110 each, get two. And later, add monitor 40's for surrounds, a C2 for center and pick up a nice 12" sub if you need even more base--I will say though, the 50's and 40's here will output so much bass that unless you're a bass-head, you'll shake walls already as it is.
Very best, Edited by MalVeauX - 5/14/11 at 12:50pm