HTPC is what you want to google.
It is a project with a steep learning curve.
I'd recommend you look at starting with a Windows MCE 2005 system and a MCE remote control. It will get you up and running playing DVDs, AVI's and if you have the correct DVB-T some PVR capabilities with a fairly good "wife approval factor"
Once you get the feel of it you can change your front end to something like Media Portal.
Windows Vista (Ultimate?) has a slightly more advanced media centre in built, but you then get DRM problems.
The PVR side is the hardest to get well integrated, mine isn't really, I use the app that came with my card (Avermedia) and it's not the best. Whatever way you go research which TV (DBV-T) card works with your front end/server. Windows MCE doesn't allow video (S or composite) recording even if the card can, so you can only record foxtel via it's UHF TV output.
Some links:
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