First post here, but been lingering for some while in the 'on-topic' forums.
Seems like a lot of good information so far. I currently have an Infrant/Netgear ReadyNAS which offers several media streaming services as well as backup and a photo library tool. If I read right though the NAS solution has been taken care of.
I use one of the older TViX media players which is OK, user interface is better than a lot of the earlier media players, but probably not on a par with some of the newer stuff. I used to have an XBox and loved XBMC, but I killed it trying to do a cooling mod.
We are looking at the whole multi-room AV thing at the moment with the prospect of building a new house. A friend of mine recently pointed me at the Boxee software, which is apparently a spin off from XBMC. It's currently in alpha/beta release and I haven't had a close look at it, but he's a media specialist and he seems very keen on it. From what I can tell they are bringing out a dedicated box later this year, but the software will run on a dedicated PC, whether it works on these new ITX type devices I don't know, but would be surprised if it doesn't.
Anyway, just another option to throw into the mix.
As for HomePlugs, I use the 200MB ones from Solwise. They will happily stream an SD DVD ISO without breakup, but they are susceptible to interference, especially if they aren't given a dedicated power socket, and bandwidth can drop.
The one issue which I am not sure if the OP has the information on is DVD transfer to disk. If you are OK with this part then fine, if not then you need to be at least aware of the copyright issues. There is software out there to copy DVDs but it is of course illegal. The other issue is the quality of the copy. I see this has been touched upon. IMO if you are going to bother of setting up this system you would want to watch DVDs in their original quality, which means ripping them as ISOs or VOBs. As Wizer points out, some stripping is possible and would save space, especially unwanted soundtracks, especially from European DVDs that have multiple languages. A knowledge of the DVD format is useful here, but there are guides on line (
www.vcdhelp.com is a good one - I think it has been renamed, but that URL I believe still works).
HTH
Simon
EDIT: I see my URL has been caught in the not-enough-posts-spam-trap but pretty obvious what it is I think, if not am happy to talk about any of the above off line, as the OP has indicated he would be willing to do.