i didn't read all the above posts but i'll give you any info on hardware and software i know for media center.
Hardware:
you'll probably want to keep it quiet while you're watching a movie so i guess you're gonna need silent fans, hdd's and graphic card coolers.
- Cpu cooler
I use the scythe infinity with the stock fan (practically inaudible) unless you're gonna buy a special htpc case this will fit. If you're planning on buying a htpc case i really wouldn't know where to get small coolers but it will be much more audible.
- Graphic card
the 8800gt is overkill for a media center. I would suggest something with a little less heat output and passive cooling as stock. Like the asus 8600 gt silent. This will be more then enough for you.
- Hard disk
Samsung is THE manufacturer for quiet hard disks. They aren't expensive and they're very quiet. Just make sure it doesn't get to hot because they're known to generate quite some heat.
- Fans
Papst is one the best brands out there you can get and i would suggest the 120mm Papst Fan 4412 F/2GLL or the 80mm Papst Fan 8412 NGLE. Depends on which size you can put in your case.
Software
- Media Center
I don't know anything about linux mce but i do know you don't want to use the xp mce or vista mce. I've experimented with it for times and it just is a load of crap. Does all sorts of things you didn't ask for, is very sluggish and doesnt play a lot of formats. Instead try out Mediaportal, it's a standalone application and it's freeware to. Very easy to use and plays a lot more formats. You can also use an external player in this app like the vlc player mentioned above.
- DVD ripping software
I wouldn't rip your cd's using dvd decrypter. all of the options you can choose from use a lot of diskspace you can conserve. Instead try converting it into an xvid. This will lose you the option the use menus if i recall correctly.
Dvdfab can do this for you.
Hope i helped