However, if you pay for cable service and want to watch those cable channels on your computer, the above cards won't do the job--only the cable box installed by your cable company can decrypt the cable signal. To watch them on your computer, you have two options.
The first is to let your cable box do the heavy lifting of decrypting the cable channels, and then simply intercept its video signal output. Hauppauge makes a USB box called the PVR2 that does exactly this--taking an HDMI or component source and piping the video stream straight into your computer. It even includes an IR (infrared) blaster, so you can control the cable box from your computer.
Unfortunately, even this option has a downside. The digital HDMI signal that your cable box outputs is also encrypted, which means that if you want to watch non-QAM channels, you'll have to connect the PVR to the cable box via component cables, and that means you won't get full 1080p quality.
The second option for watching cable TV on your computer is to use a card such as the InfinitiTV 6, which actually decrypts the signal itself using a CableCard like the one found in your cable box. You'll have to get an extra CableCard from your service provider, which for some providers will require a visit to your house by a technician. Still, with the ability to watch and record up to six cable shows at the same time, you won't find a better solution for watching TV on your PC. At $300, the InfinitiTV 6 is a pretty major line item in your HTPC budget, but the older InfinitiTV 4 is still available for less than $200.
With a Blu-ray drive and the cheapest TV tuner, your total hardware cost should be right around $500. For a little more money than the budget officially allows, you could buff up your HTPC with extra storage, a fancier TV tuner, or a sound card such as the Asus Xonar. If you have a lot of HD media stored on local drives, consider augmenting your HTPC with a network-attached storage drive, which will let you stream scads of data across your home network without actually having to cram a bunch of hard drives into your HTPC's diminutive case.
Finding the best software
The other half of the HTPC equation is the software--what you use to browse and play all of your media. You don't need special software for an HTPC, strictly speaking; you could watch streaming media in a browser, play video in Windows Media Player, watch Blu-ray discs on whatever application came with your drive, and so on. But that setup creates a kludgy user experience, especially if you're planning to control your computer from the couch.
Sign up for CIO Asia eNewsletters.