Need advice on an HTPC

I currently have an HTPC but am looking to make some modifications.

Current build:
Athlon 64 X2 6000+
2 GB DDR2 RAM
NVidia GeForce 210 with HDMI
500 GB SATA HDD
640 GB SATA HDD
AM2 micro ATX board with onboard sound, 1 PCIe x16, 1 PCIe x1, 2 PCI
USB card reader
Generic slim server case (micro ATX board, one HDD bay, one floppy bay, and one optical bay; requires half-height expansion cards)
Slim 300-watt PSU (custom size and only fits in slim servers)
PCI Rosewill Wi-Fi card
PCIe x1 AVerMedia HD DVR (HD capture card, no tuner)
Windows 7 Professional
Mouse
Keyboard
WMC remote with IR receiver

Software in use:
Windows Media Center (movies, music)
VirtualDub (capturing)
Media Player Classic HC (playing stuff without WMC)
VLC (playing stuff that doesn't work)
Internet Explorer 9 (browsing)
pianobar (Pandora Radio client)
XMedia Recode (transcoding captures)
DVDFab Free (ripping DVDs)
Handbrake (transcoding DVDs)
x264 (transcoding pre-recorded content)
mp4box (muxing, used with x264)
PICVideo MJPEG codec (capturing)
Windows Media Player (ripping CDs to WMA Pro)

Available to use:
Intel Core 2 Duo (with micro ATX motherboard)
SATA DVD drive
IDE DVD drive
USB DVD drive
250 GB laptop SATA hard drive
1 TB desktop SATA hard drive (x2)
2 TB hard drive in another computer (moving captures after transcoding)
1 TB external USB hard drive (backups)

Amount I'm willing to spend:
Ideally under $100.

This system serves several purposes:
- I can watch ripped DVDs and TV shows and listen to ripped CDs. If I install a DVD drive, I can watch DVDs and listen to CDs. The operating system and these files reside on the first hard drive.
- I can capture content from other devices (video games, VHS tapes, or anything else with analog or HDMI outputs up to 1080i), typically captured M-JPEG/PCM then transcoded to H.264/AAC. This is the primary purpose of the second hard drive: a scratch disk for captured video, which can sometimes reach to 200 gigabytes from a single session.
- I can use it as a quick Internet station
- I can convert videos on it if it's not being used



Now, here's where the issues arise. As its original purpose was a server in a noisy server room, noise wasn't an issue in the design. This system is quite loud, and the PSU sounds like it's on its last legs, and it's a hard one to replace. I've got a few of them, and the oil trick doesn't work. I know the cheapest option is to simply replace the fan, but I figured I might as well see what else I can do. How should I setup the hard drives in it? I can't really fit one in the floppy bay, so there's a memory card reader in there. Should I install a DVD drive? Should I opt for a new case, or maybe some kind of mini ITX board? What about that laptop hard drive?