I have just the setup you are looking for and by the sounds of it you have come to the same conclusion I did.
Windows Media Centre is a very good system, XP is by all accounts the most stable but VISTA seems to have settled down now.
Not sure about BlueRay though as I don't use it as yet.
Have to agree about the storage (HDD) although running separate portable drives is simple and convenient. At least 600gb is required.
I also have to agree about the passive cooling. Mine had 5 cooling fans buzzing away at one point. Got that down to 3 now but they do quickly clog up with dust in a living room environment when it's running for the bestpart of 20 hrs a day, once out of baance they make a hell of a row.
Oh and don't forget to back up your data.
ParaPunter is yor man. He's built a few.
What is it with freeflyers and Media PCs??