I finally reformatted the old desktop (Athlon64 3200+, 1GB RAM, Nvidia GeForce 6600, 320GB hard drive) with a fresh install of Windows Vista Ultimate. I had almost given up on the damn thing because of all the problems I've had with the hardware. It had been sitting idle in the basement for months.
After replacing the power supply and video card last year and getting new SATA hard drive this year, we may have at least a temporary success. Besides the DVD drives (and case), the only original hardware is now the motherboard and RAM. We know what to blame if we still have problems.
Now it has a fresh, clean install of Windows Vista, with no programs except Windows and Skype. I hooked it up to our new Sony 50" SXRD via DVI-to-HDMI and SPDIF to the receiver. It runs the Windows Media Center interface at full 1080p resolution (59Hz) and plays DVDs with full Dolby Digital 5.1 channel sound. Sweet.
Oddly, the regular desktop interface overflows the screen if I set the resolution to 1920x1080, so I'm running it slightly under that which allows the whole desktop to show but puts a black border around it. When switching to Media Center it goes to full 1080p, which is nice.
Sony says to use the VGA input on the back of the SXRD for connecting PCs, but I'm using the HDMI input because it allows up to 1920x1080 resolution which fills the screen. The VGA input, for some reason, plops a small window in the middle of the screen with huge black borders and no way to stretch it. There's no way to even get close to 1080p using the VGA input.
Besides the desire to use Media Center as it was intended, on a TV, the other reason I did this was so we could actually use our Netflix video streaming hours. We get so many hours per month but we never use them because, let's face it, who wants to watch movies on a small laptop screen?
Let me tell you, the Netflix streaming works very well if you have a decent internet connection. We have the basic Verizon FiOS service (5Mbps), and we get the highest quality video. Watching videos via netflix.com is almost DVD quality. No Dolby Digital surround via Netflix though, at least not yet. But this is very, very usable. I'm hoping that Netflix makes a plug in for Media Center and/or releases a cool Avalon/Windows Presentation Foundation-based video browser that can be controlled via remote. And maybe Mac-support too. :-)
Man, this is more awesome than even I expected.