Hi Greg,
Thanks for your response
Your Xbox 360 should be ok for watching TV/playing back recorded TV but it does have other limitations as to playing other sorts of media. Best to look in the 360 forums on here for more info. Looking at your system specs, you might be better playing back all of your media from a local HTPC rather than remotely.
I have looked at the 360 forum and they seem to have very good comments about it as an extender. I understand there are the limitations with it running DivXs but have also seen that people have had good experiences with the transcoder. I guess the main reason for thinking about using the 360 was that the HTPC would basically would be taking more load off the PC in regards to video and sound and putting that load onto the 360. So you think these specs should not have any problems with load anyway (thats good to know )
Another reason I was thinking about this was cost, since I am getting the 360 anyway, I thought it would be a cheaper alternative to get a regular case than a HTPC one, even though the HT case looks heaps better

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What you've suggested sounds ok. I've found running a wireless connection is fine for mp3's and xvids but struggled playing other media. If you can wire it then do it.
I guess the wireless link will really be hooking the HTPC and 360 back to my main pc and the Internet, and there will not be much on the main PC that will be streamed across the link if anything... all the mp3s and xvids will be on the HTPC which will be ona 100Mb switched link to the 360.
Which other media were you referring to which struggles BTW ??(am new to wireless here)
The Harmony 880 remote is fantastic for controlling all of your AV equipment but I found it a bit cumbersome controlling MCE. I haven't used the Logitech Xbox 360 remote to comment but the good ol' Microsoft MCE Remote works a treat and has the WAF as well. You can program the MS MCE Remote to control the volume on your HK Amp.
Ahhh ok interesting, I wasn't aware that the MS MCE remote was a learning remote, I figured it would only handle MCE. I guess one thing that I was thinking about for the HK amp which I hoped the logitechs could deal with was that my HK seems to have a seperate code for turning on and off (different button on the receiver remote also, which is a little odd) normally power switches seem to be toggles.