Some further thoughts for you. The motherboard you are looking at would make quite a good HTPC (I think) if you were conecting it directly to your screen.  Stick an HVR-2200 tuner card into the PCI-e slot and add some storage (either in the box or on your network) and you're away.  The main qualifier here is that I've not heard of anyone else using that board yet so there may some possible problems that I am not aware of.  To decode H.264 you need EITHER a good CPU OR a good GPU.  Win 7 Mediacenter (amongst other options), with the right hardware, will offload the decoding to the GPU if it can.  This is the best option and recently Nvidia has been the more reliable for HD video.  The built in GPU on this motherboard should do the job no problem.

However if you want to stick with the headless PC and go with the extender option the requirements for your PC are really quite different.  To be honest I would build a very basic PC in a cheap case and stick it out of sight  somewhere (in a cupboard?) if you can.  The old CPU you mentioned earlier will do just fine here.

If you are going with the extender option on Win 7 MC the 360 is fine with H.264 (whereas the D-Links can't do it) but it is limited to what else it can do - hence a direct connection to a HTPC will give you more options.

That's my extra 2 cents worth anyway