Wow, some of these suggestions would be great for a gaming system, but I fail to see the use of a 500 watt PSU, raid, a Dual core processor, or anything but a budget video card in a media center. They aren't designed for gaming after all. I can play music and DVDs on a PII with a soundblaster live and a ATI Rage Pro Turbo with 8MB of onboard memory. I still recomend something better than that if you want to do it right though.
I suggest:
Either a Mobile Processor (just if you want energy efficency and less heat), a Celeron (Celeron D at the most), or a Sempron.
Either a X550 - X700, or a X1300-X1600 (at best). These all have HD out, so what more do you need? I would recomend some 9x00 series cards and their Nvidia equivalent, but I don't know which ones support HDTV out, I know some do. Check them out, I'm sure a 9500 would do the job too. Definetly a 9 series card if you never plan on needing an HD out signal.
512MB of DDR 400, or DDR2 400-533 (Depending on Motherboard, and processor chosen) and make it the main companies value chips which are completely reliable. You don't need OCZ's or some other companies super memory.
If you plan on having a nice speaker system, get a nice 7.1 Creative card. I like Audigy 2 or later, but a SB Live! would do too. Otherwise, just get a board with decent onboard.
A TV tuner or ATI All in Wonder card is nice if you want to record TV, or convert your old VHS(great if you have a bunch of family video you don't want to lose) to DVD.
If you plan on recording TV, video, and storing music, you will need a lot of storage, at least 250GB. Serial ATA is nice, but IDE ATA 133 is plenty fast to play back music and video. If not, then get something small. The only reason you would need any kind of raid is if your affraid of losing data. So raid 0, is out. Why would you need to access a song in 1.0 x 10^-9 seconds? I don't have raid, and I can call up 5GB video files in less than half a second.
If you don't go out and buy a super video card or processor, and for a media center you don't need head room for OCing, a 300Watt PSU is fine. Depending on how many Optical drives and HDDs you want to run you could probably manage a 250 Watt. Whatever you get, get a good brand. The cheap brands are notoriously unreliable.
Optical drive(s) that reflect your needs.
A Micro-ATX board and a small case would be nice so you can conceal it easily if you want. Otherwise... whatever tickles your fancy.
Personally if I were building a media center, I would scrap and scrounge parts, before I even went to a retail store.
) about the CPU cooler. I'd reccomend something from Arctic Cooling, they're quiet and do just as good a job as the Zalman coolers, if not better. Antec SP-500 is a VERY quiet 500W power supply, and then get a NVsilencer5 for that 6800GS I reccomended earlier. After that, a gig of ram, an audigy 2, a TV tuner card (if you're watching/recording TV), and at least one DVD burner makes up a HTPC. Motherboard is your choice really, just make sure it's stable and quiet. Happy Gaming...or whatever you do with an HTPC 
. I still disagree with the 6800GS if you want the advancements a X1300-X1600, or 7300-7600 is about 120 dollars cheaper.