well I think that system sounds rubbish this is what I would suggest heroes two systems one is Atx the other is micro atx
Atx system:
Case: thermalrock Mystic
Mobo: Abit AW9D Max
Cpu: E4320 (if you can wait until the summer if not then a E6400)
Ram: G-skill 1gb value select
Hdd: 2x320gb Seagate barracuda (raid 1) = 610gb of hdd space for dvd rips
optical drive: Nec silver Sata dvd-drive
Os: Windows Xp media centre edition (vista wont be fully compatible for at least a year wait for the service pack) I have used both and xp is noticeably faster at start up
Tuner: Hauppage pci card (whatever your needs require)
networking: wireless card b/g 54 mbps belkin netgear both have good support.
PSU: Antec true power (the one in my signature should be more then enough)
Video Card: 6800gt (is hd compliant) but any dvi output card will do as you can buy DVI to HDMI cables
Try some other websites like dabs.com or overclockers.co.uk and select the cheapest after all components
This will cain the pc you currently have and havent priced it up but should be around £800