System Usage from Most to Least Important: 1080p playback, surfing the internet and light gaming like emulators. Basically use xbmc to its full capabilities.
Parts Not Required Want to use as much of my Hp Pavilion Slimline 3400f as possible. Thinking I won't need a cpu. I also have wireless keyboard/mouse combo and an external hdd at 1.5 TB to get me by while prices are high. Going to use a lg50pz550 for a monitor and I'm not sure If I should upgrade to windows 7 or keep vista.
Preferred Website(s) for Parts: newegg.com
SLI or Crossfire:no
Additional Comments: Looking for a HTPC case and maybe a blu ray drive. I'm wanting to set this up so I can easily upgrade in a couple years so what i'm thinking would work is a new mobo with dvi out and optical audio out. A tv tuner with a cable card so I can dvr. A xbox360 controller for the games and possibly a remote? Not sure, really need some advice.
Looking at the specs of the system you have, rather than buying a new case and an outdated motherboard, I'd consider just adding a discreet (probably low-profile) graphics card and call it a day; something like an AMD HD6450.
Connect the system using the graphics card HDMI output to the HDTV. You should be able to swap out the DVD Drive for a Blu-Ray drive as the current drive is SATA. Add a Hauppauge WinTV-DCR-2650 or a SiliconDust HDHomeRun Prime and you have your DVR function as well.
Wow, 150 watts... Yeah, you'd probably have to upgrade the PSU as well. I did find out some information about upgrading the PSU, so it seems that it is possible. Do some more research and find out the cost of upgrading the power supply. The idea here, is to *not* dump a ton of cash into this system.
As for the card, that should be more than enough to suit your purposes and I'd recommend it.