To record TV, you do need a tv card.
The system should be fine for watching DVD's and other video.
To get PVR functionality all you need is a tv tuner and IR blaster(like the one included with the Microsoft MCE 2005 remote kit) to control your cable box.
Software wise you can use MCE or a linux equivalent.
With the onboard video you have even blueray playback is more then possible with the right drive and software.
That said, my SD PVR/HTPC system is just an a64 3200+(undervolted), K8V SE, WinTV PVR 250,Geforce4 Ti4200,1gig of memory and 1 120gig drive and dual 500's for storage. The system runs XP MCE 2005.