I also want to be able to send all my MP3's from my computer digitally to the Denon to be converted over to analog as I'm sure the Denon has far superior DAC's then the Hewlett Packard does! So I'm wondering, do I have to install both a new sound card, and a video card? Or is there a card that does both at the same time and sends everything down the HDMI cable???
If you want, you can buy a HTPC for around 700$ CND. You will need to get a ATI video card(you can use others but ATI seems to work best most times), I use a HD 2600 Pro and it only cost me 80$ and it can play blue Ray/1080p just fine though the DVI-HDMI output. (Card is not that good for games mostly for HD T.V)
But for audio you will need to get a sound card. I have a PCI Express Sound Blaster X-Fi Titanium for around 100$ but you can get cheaper ones for around 50-80$ that should do the same job. For music I use napster and have been happy so far.
So for my video I use the HDMI and for audio I use the optical cable. I have not had cable/Sat. for over 3years now, All the HD content is on the net and most if you know where is 1080p and 5.1 dts,ect,ect. If you have the time read up on it it will save you lots of money in the long run I only pay for my internet which is only 50$ when most people pay 100+$ for cable and 30+$ for internet on top of that. One thing I will add is that if you like sports and racing HD cable/sat. is still the best way to go.
One thing I will add if you don't know anything about computer fine someone you know that does b/c it is hard to get all the stuff working. I know an avg. amount about computers and it took me 2 days to get it all working and it still has a few bugs from time to time.
Oh, one thing to note a blu-ray players go for around 200-400$ and a blu-ray for a computer is around 100$. Also if you want you can buy hard drives that are very cheap for the space they offer. I have about 4 TB in my HTPC, for me that holds over 500 HD movies/T.V shows give or take 50, (half 1080p other half 720p).
If you are willing to take the time to build and set it all up you will love having internet in the living room, heck, I'm typing this right now laying on the couch with my wireless keyboard/mouse combo.