I have a HTPC and rip all my Blurays to MKVs which in turn get stored on a pretty cool NAS I have built that is really ideal for media streaming.
My HTPC is Windows and I use XBMC and my media manager however I invoke an external player for playback.
I strive for the best quality playback for video and sound. I rip my blurays as is without any compression for both video and audio. For example Xmen First class ends up as a 28GB MKV and Avatar EE is about 33GB.
Finally, I use a specific player, splitter, video/audio decoders and renderer to achieve the best possible playback. XBMC is an awesome media manager but playback is nowhere near up to par, for example, it can't bitstream audio such as TrueHD and DTS MA.
I can share how I have done it if any of you are interested.
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