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Video card (nVidia w/HDMI out - not sure which yet)
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I believe the 8500's have a good reputation for being cheap and capable of hardware accelerated video decoding, personally I've got an 8600gts, never had any problems with it (except that I replaced the stock cooler as it was rather loud!)
I'm not sure if you'll find many cards with HDMI out, last time I looked there weren't that many but things could have moved on, I'm using a DVI to HDMI cable and this works fine.