Yes I have a copy of windows 7. I am not sure if I will use the 32 or 64 bit version. I was also planning on using the on board graphic hoping that with the side port memory it will be enough for blu Ray playback.
It is, there is an HDMI output so I wouldn't worry too much. The IGP is a Radeon 3350, easily strong enough to render a Blu-Ray. I could be wrong, but in the worst case scenario, you will need to buy a 4670, which isn't even 50$.
I will be putting this guy in a media cabnet with everything else. It will not have good air flow so I was a little concerned about heat. What I am hearing now is that I was a little too worried about that? Should I go with something like a AMD Athlon II X3 425 2.7GHz Socket AM3 95W Triple-Core Processor?