Thanks all for your help.
I should clarify that for the most part I will be recording TV onto it, as well as watching DVDs and encoding them onto it as well. Due to the fact the only TV I can get comes through a Satellite Decoder, so I can watch the TV with one output from the decoder, and record on the computer from the other output. I have seen TV turner cards for PCs that accept the smart cards that go into the decoders. But then I need to get a second card from the satellite company, and they charge for that like wounded bulls!
I think at the moment, I will be replacing the Mobo, CPU, RAM and graphics card, and will get an extra HDD for it too. The graphics card I am looking at is an MSI Geforce 8500GT with DVI-D, VGA and HDMI outputs, mainly for future use when I replace my current TV with LCD/Plasma.
The mobo and processor will be replaced mainly because the processor is single core, and the mobo doesn't accept PCIe cards (AGP cards all of a sudden have become expensive!!).