My ambitious home theatre PC project

If I were to do a thing like that, I would use a Raspberry Pi running XBMC, with either a USB drive, or connected to a NAS.

If you are not familiar with the Raspberry Pi, try googling Raspberry Pi HTPC and you will get millions of examples

 

The pi is ideal....very small and plenty powerful. If you want a PC form factor, I guess a micro ATX board might fit into the Atari casing....streaming video really isn't all that demanding on hardware, it's when you start rendering and encoding that you need powerful machines.

If your just going to use the box to store and view, then you should be able to put it together pretty cheaply.

 

I would actually buy a refurb Mac Mini and remove it from the casing to put it in the Atari. I think it would fit?

 

i also would go with the pi.
it's the best option for what you want to do, unless you need HD audio. (Pi will only do 5.1 dolby digital)

you also need to look at what software you want to use, the 2 main ones being plex and XBMC, both of which have been ported to the Pi.

the main differences are ...
Plex requires a server app running, so you'll need another computer running on your network to serve the media, it can also convert files to something the client can play.
XBMC will pull direct from a drive. either local or NAS, but the files need to be in something compatible.

also think about control, a lot of people like to use their phones, but an IR remote with hard buttons is nice to have, so you aren't fumbling trying to get an app open if you want to pause the TV.

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or even easier, you'd probably be able to squeeze a roku in there.

 

While both VLC and iTunes exist for OSX, Windows is a better option with XBMC. The reason is one big one - OSX does NOT support HD audio streams.
If you install Windows on a Mac (or Linux), XBMC under the non-OSX system is capable of playing HD audio streams within a given file. Windows can handle with XBMC DTS-Master but on OSX, it will be reduced to the core which is plain ol' DTS.

 

Stick a Intel NUC board in there. The Atari is big enough that you should be able to fit a 3.5" SATA drive in there along with the mSATA drive you'll put the OS/apps on.