Good card for full h264 decoding

Yes the 8600GT does do H.264 encoding, but is a older card. ATI cards do great H.264 encoding, I have one in my HTPC rig. Works fine but its a matter of finding right drivers. The X1900 doesn't do encoding very well, the cards that did H.264/VC-1 was starting with the HD2k-HD3k and up series of ATI video cards. All of them has this "UVD" technology except for a version of the 2900XT.

I personally have a 8400GS which is a horrible gaming card, but a nice HTPC DXVA card. It can be comparable the 8600GT in terms of the technology used to decode the videos. Nvidia uses PureVideo while ATI uses AVIVO. I personally never really liked the CCC all that much, but I guess its easier the more you use it. If you really don't game go for a card like the 9400GT, or HD4550 from ATI. The 9400GT was a great little HTPC card, since my friend's HTPC has one in it. Should do VC-1/H.264 encoding.

What program are you plannin to use for these H.264 playback? I personally use MPC-HC and find it does DXVA quite well. Altho PowerDVD 9 also takes advantage of AVIVO and PureVideo.

HD 2400 - older but has hardware 264 decoder and 5.1 built-in for audio over HDMI.
And it's cheap. Very cheap.

I would get a HD 4550 or HD 4650.