There are many small form factor HTPC's available on the market today. I would recommend something dedicated.
For me personally, I use my laptop with it's HDMI port into my stereo, and I use XBMC to organize and sync everything. I am also using a 4tb NAS drive over N band. It seems to play everything just fine, and gives me cover flow for Cd's, DVD's, and plays all of my files with no problems at all.
(I also use a gyration air mouse to control everything...they are the best because you do not need a compatible surface, and work flawlessly)
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