Theoretical question about streaming HD content to my TV...

I'm researching building some sort of FreeNAS/Windows Home Server type of system for storage of my audio, video, photos, docs, etc. Originally, I was thinking I'd be building the following:

1. XBOX 360 - attached to HDTV in living room; client for server-streamed audio or HD movies
2. FreeNAS/WHS server box - located in bedroom; server for audio and HD videos; would serve to laptop and XBOX 360
3. Windows 7 laptop

With this setup, I assumed I'd serve up HD content stored on the server to my TV through my XBOX 360. Then, I came across some HTPC articles that made me question this plan.

I then wondered whether or not building a second machine that would basically be an HTPC would be the better option. With an HTPC attached directly to my TV, I wouldn't have to worry about streaming HD content across my LAN. The HD content would be directly connected to my TV via HDMI and there would be a dedicated processor playing it. The original bedroom server processor would be free for other tasks (torrents, audio streaming, documents, photos, backup server) and there would be far less strain on my LAN due to the lack of HD video moving over it.

Basically, my question is how much of a dedicated processor do I need for HD video viewing? Should I devote an HTPC for it or use the server to stream it to my XBOX 360? I'd like to keep buy/build as little hardware as possible, obviously.

As long as you have a decent home network, I foresee no issues with streaming content. Myself aswell as friends of mine do just this. My friend has a basic little server set up, and streams onto his 360 with no issues whatsoever. I've streamed to my PS3 as well.

I see no need to build an HTPC for your specific application. Assuming all you want is playback from it, then it will serve you well.

Good luck.