I have an existing HTPC running Vista MCE (Ultimate). It's already set up, runs DVDs and MPEGs great. I saw a BD drive on Newegg for $80 and thought, awesome, so I bought it. I thought that my onboard mobo video would be adequate to play BD's but it seems that it won't. Even though playing Blu-rays was listed as a feature of this motherboard (EVGA 630i). So I have to do the math and decide to sell the BD drive (can't send it back for a refund) or keep it.
Stand-alone BD player: about 250 for a name brand (if you have a link to a better deal, please share!).
HTPC BD Player: new video card (40), software (70, Arcsoft TotalTheatre), BD drive (80) = 190
So the internal BD player is pretty reasonable and means 1 HDMI cable vs. 2 for the HTPC and stand-alone player. But this means more work in the long run, there'll be software updates to deal with and so on. Still, that's offset by having one place to go to to play all my media. That's worth something for sure.
As for the audio, 7.1 isn't something I care about. 5.1 would be fine, but I'm not in a hurry to go there. I'm not a big audio geek.
The other option is a PS3. I'm not interested in it really. I'm not a fan of Sony as a company. Not that many games for the extra 150-200 bucks I'd spend on it ($200 which I could put toward a 360). If it was $300 it'd be a slam dunk. A backcompatible PS3 on ebay runs about $400. There was a promotion a while back where you could get one for $250 but I can't find it today so it may be gone.
Edit: HDCP is utter crap. I can't get Arcsoft or PowerDVD to recognize my mainboard's HDMI output as HDCP compliant (which it is!). Putting DRM roadblocks in people's way frustrates many people and encourages smarter people to just bypass it. DRM harms consumers and doesn't stop pirates!
Mobo drivers: yes
CPU: Intel Dual core, don't know the model number off the top, it's mid-range, about 8 months old
Mobo: EVGA 630i w/ onboard NVIDIA 7150 graphics and HDMI output
HDD: about 1.2 TB between 2 drives
OS: Vista Ultimate
I had a dedicated video card, but it was only there to provide an S-video out for my old TV. Since I upgraded the TV I've used the onboard video (removed the dedicated card) and it does fine, outputs 720p content via the HDMI port. But blu-ray? No go.
I've had similar annoying issues with HDCP. I have a HDCP 1.3 certified nVidia video card, a HDCP 1.3 certified HDTV set connected to my Vista Ultimate media center with an HDCP 1.3-certified cable...
I've had to upgrade nVidia drivers on this motherboard several times for different reasons and most drivers have had some screwy bug where HDCP doesn't get detected all the way through the system so ArcSoft Total Media Theatre complains and stops playback.
I solved this by grudgingly buying Slysoft AnyDVD HD to turn off HDCP requirement. It makes me feel like a criminal or like I'm trying to "get away with something" when it's really the DRM that's trying to make it impossible for me to watch BluRay movies on my HTPC.
If you get an ATI card (one of the more recent ones), they have an onboard audio chip that passes audio over HDMI without the need of the motherboard soundchip. Also, a lot of vid cards have DVI that will pass this audio using an HDMI adapter, though it is easy enough these days to just find a card with an HDMI port on the backplate.
Seems like the cards with a dedicated HDMI port are more expensive. Plus if I want to send that audio signal somewhere else down the road (my mobo has an optical out) seems like I'd end up using the DVI for video and something else for audio.
So I'm gonna get a BD drive (Lite-On DH-401S-08, bundled with PowerDVD), dedicated video card (hopefully fanless!) and DVI-HDMI adapter. That ought to do it. Still scared that I'm gonna have to wrestle with more HDCP bull, but... shrug.
Got this sorted out. Using an 8400GS Nvidia card (with PureVideo 2, very important), will output at 1080P/24. PowerDVD works fine. The audio was a little weird, I thought my TVs audio input via a stereo jack would be digital, but it's analog. Took me a lot of fiddling to figure that out for some reason I was convinced that jack would be digital. Needed a DVI to HDMI adapter, $10 there. A video card with an HDMI output was significantly more.
So total cost was $155 for BD drive, HDMI adapter and video card. Not bad for 1080p/24 output. I'll be upgrading for surround sometime in the future, but that means a new receiver and I'm not super in to the surround stuff so it's not very high on my list of upgrades.