HTPC or AV Receiver

[DRosencraft]

I'll start by saying I know little to nothing about home audio. I'm no audiophile or anything of the like, but I had a family member ask for a little help. They want to add a home theater like setup for their bedroom (15'x15') and another for the living room. They're trying to save as much as possible. They are considering an HTPC component (and obvious choice). They are hoping that they can eliminate the need of an AV Receiver by putting just a little extra into an HTPC. My question is whether or not this is possible (eliminating an AV reciever from a home theater setup). I have heard that there is a serious loss of audio quality trying to go that route and that a 7.1 system is impossible. They are insistent on a 7.1 setup for at least the living room. Any help would be appreciated.

 

[DRosencraft]

So.... it's been about a week and no one's got an answer, so I can only guess this is a problem few have given much thought to. So I'll shift gears slightly.

I'm gonna be building and testing an HTPC in about six months. The case, motherboard, memory, and optical drive will be leftovers from previous builds for me or others that didn't get used. So, I'll give a parts list, and if I can get some feedback that'd be nice. In case anyone is curious I've also included at the end the speakers they're looking at right now.

Case: http://www.rosewill.com/products/523/productDetail.htm

Motherboard: http://www.msi.com/product/mb/785GM-E51.html

Memory: http://www.ocztechnology.com/ocz-ddr3-pc3-10666-platinum-edition.html

Optical Drive: http://www.asus.com/Optical_Storage/Internal_Bluray_Drive/BW12B1LT/

CPU: http://shop.amd.com/US/_layouts/shop/ProductDetails.aspx?productID=ADX250OCGQBOX&region=us-en

Storage: (WD5000AVDS) http://www.wdc.com/en/products/products.aspx?id=150

GPU: http://www.asus.com/Graphics_Cards/NVIDIA_Series/ENGT440DI1GD5/

TV Tuner: http://www.hauppauge.com/site/products/data_hvr1850.html

Sound Card: http://www.diamondmm.com/XS71.php

Power Supply: http://www.xigmatek.com/product.php?productid=35

Sub: http://www.newegg.com/Product/Product.aspx?Item=N82E16882290034

Center: http://www.newegg.com/Product/Product.aspx?Item=N82E16882290210

Satellites: http://www.newegg.com/Product/Product.aspx?Item=N82E16882290194