The main purpose for my HTPC is to record TV shows for later viewing, listening to internet radio and as a music jukebox over my stereo system, as well as photo editting and video editting of my home videos. Hardware-wise, any modern PC can do audio with a fairly cheap audio card. But to do video properly one needs a fair amount of power to get satisfactory results. And storage space, lots and lots of storage space. For software, you could use separate programs for audio and video presentation, but an all-in-one solution really is best.
General HTPC Links
AVS - General Home Theatre
AVS - PVR
Computer Video
Miniing Co Video
Digital Canada HTPC
Whining Dog HTPC
ARS RS Technica article
Ultima8PC
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