Making use of my outgoing PC...

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That machine is plenty good for a media center box.

I would go with SageTV though as it has the best feature set for it's ease of setup. And I've tried them all. The only setup that was better was MythTV (linux) but it's a nightmare to get set up correctly, and if you breath on it funny it might crash (though I've heard that recent updates might have fixed the stability issues). Media Portal was decent but it wasn't polished enough for my tastes.

The only thing you'll need other than what you have now is a tuner card (a hauppauge 150 will be plenty good enough) with HARDWARE MPEG SUPPORT, and if you want the computer to do the channel changing you'll need a USBIR receiver/transmitter and IR transmitter led cable. Other than that you should be good.