Help with creating/setting up HTPC / File Server

So just to be clear, all you want to do with it is watch your media that's on the "box" on your tv right? Do you plan on gaming on this? If not you could build a server that goes in your closet and use something like and xbox, roku, or a separate computer maybe with the higher end card in it in case you want to game with it. If all your going to do is host media files then an i5 and the 7870 are overkill for that. I would build the server with all those drives (20... really?) for the closet and network that to a smaller pc that's connected to the tv.

I wasn't dissing on the 20+ drives. That's pretty impressive and honestly makes me kinda jealous. The i5 might not be a bad investment but if its going to be on all the time and all its going to do is host your files on a home server then maybe a lower power g630T or something along those lines would be a better choice? Then you could build a dedicated htpc that is close to your tv or projector and you could hook that up via hdmi and stream your blue-ray collection from your server to your htpc. You just don't want to be streaming over wifi.

So to sum up, I would say build a dedicated server with your 20+ drives in the closet and a dedicated htpc that connects to your tv. An amd a6 or an a8-3850 would be a perfect candidate for a dedicated htpc and will handle blu-ray just fine.

Its still early I'm sure some experts will chime in shortly and give some better input

I am also in the process of building a media server, using the Norco RPC-4224 chassis (24 drives). It will partly be used for the same thing you are wanting to use yours for, and I can tell you a few things about your build. If you don't plan to hook a monitor or TV up to that video card (via the video cards HDMI, DVI, or VGA outputs), then you do not need that card. Forget about gaming on it...if you want it to be for serious media. That motherboard has onboard video, which will suffice to build the server. Once it's built and in the closet, it will only have power and a network cable connected to it, so that video card won't do a thing for you. As far as the CPU, I'd rather go for something that has a lower TDP, such as the new Ivy Bridge i5-3450S (http://www.newegg.com/Product/Product.aspx?Item=N82E16819116507). It may cost a little more, but it will use less electricity, and be more efficient. That PSU will work, but you could get by with a 600w PSU if you wanted.
As far as your OS drive, get something faster. If you are sporting 20 3TB drives (in Raid 5, for example)...that's like 55TB of storage. Why do you need another 1TB for your boot drive? Get a 60GB SSD and get better performance. Faster writes when ripping a blu-ray (temporarily to your boot drive, then copy it to your data array).

As far as serving your content on your TV, build a HTPC. The AMD A8 CPUs (Socket FM1) are great, and can play 1080p pretty well. They are also low powered.

Things like the optical out on the server don't mean much...unless this box is connected directly to your TV, or surround box.

Server --> Receiver --> TV
**Connect Optical audio and HDMI on the video card, to your surround sound receiver (in this case, maybe you should keep the video card). Your receiver is connected to your TV via HDMI, and the receiver hands audio how it normally would.

or

Server --> HTPC --> Receiver --> TV
**Connect Server (via network cable) to a GIGABIT network, and tuck the server away in a well ventilated closet, garage...whatever. Build a HTPC, that sits by your TV...also plugged into your GIGABIT network. You can connect the HTPC to your Receiver, or directly to your TV (via HDMI). Basically, the HTPC is playing the content...streaming over the network from your server. The HTPC serves the content to your receiver, via optical out and HDMI. The receiver sends the content to the TV via HDMI, and handles the audio how it normally would.

Hope my rambling helped make sense of some things.

Just need to point out those Controller Cards aren't going to work with the mobo you selected, The card is PCIX and the mobo only has PCIe + PCI slots. Will you be using hardware or software RAID? If software, just get something like the IBM M1015.

You absolutely do not need the 7870 if you are not gaming. A 6450 would playback everything just fine, heck even integrated can playback 1080p.

As suggested above, I too would make this a server only and then make a HTPC for playback

Yeah, I completely missed over the controller, lol. If you want to do a hardware raid, expect to spend ~$300-500 for a 2 port SFF-8087 controller, and another $250 for a HP SAS Expander. Best option (in my opinion) if you want to do a full on hardware raid (make sure you get a Battery Backup Unit if you are doing any raid with parity). Otherwise, do as above with a few IBM M1015s, and do a software raid.

I had no idea WHS took so much space, but I have never used it. As far as your theatre room...I would build a dedicated HTPC in there. Look up some of the HTPC software, such as MediaPortal, Boxee, and XMBC. Some of these may allow you to control your TV from inside the interface which is pretty cool.

As far as your living room, I would look into a GoogleTV Device (Logitech Revue, but it doesn't play DTS audio...Sony has a new one coming out very soon), Roku, Boxee, or some other standalone DLNA player. As far as the whole house surround sound, that's a big job...and something I'm not familiar with.

Having a receiver in either location should allow you to switch inputs, just like switching from cable or satellite TV, to a DVD player...or something like that. Just switch over to whatever function the HTPC is set up as.

Regarding a 4K projector, I don't know much about these. I don't know how much content you could get that would utilize this fully, but I would think you would need a beefy HTPC to play any 4K media. Just to make sure you are aware, a 4K projector is like $10k+...but by God, if you can get one...get one!