Is that $40 for both the case and PSU? That's cutting quite a bit off quality.
I'd be scared of putting anything near that PSU. I'd highly recommend getting something decent. Check out some offerings from Antec, Silverstone, SeaSonic or Corsair in the 300-450W range. I know of a good SeaSonic 80+ Bronze unit that's about $40 that would be ideal, but there may be some cheaper ones. I wouldn't fully trust anything that isn't from these brands.
I'd also want to get dual channel RAM. Here's a good, cheap set: Crucial 2x1 GB.
I'd also do a lot of research into the TV tuner. I know that it's a very complicated system and not every tuner will actually allow you to record anything but over-the-air channels. That means nothing off cable or a dish.
I personally fall on the side of not using an HTPC case. I find the quality ones overly expensive and poor performing. Just about all of them have complaints about the heat and noise they put off. I'd get a cheap, small mid tower case that looks decent.
Thank you for the replies. The build is complete and exceeding expectations. I did change the case from the original specs and bought a veer nice ANTEC desktop case instead of an HTPC case.
Everything is running smooth quiet and fast. Blu-Ray playback is excellent and HD tv shows are likewise excellent.
On a side note I was sceptical about the new i3s with the on board graphics for the 1080p playback and I am very impress with this chip. I would highly recommend this chip over a discrete card for dedicated builds.