Couch controlled Gaming/HTPC/NAS rig?

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I'm turning my pc into a gaming HTPC that I will hooking up to my 40" LED TV and using from a distance. I will be light gaming, watching downloaded movies and tv shows, and browsing from the comfort of my couch. I've got a couple questions to start with:
  1. Can I watch, control and record Sky Digital through my PC and get rid of my sky box? I have a Sky HD connection coming into my room and a legit subscription (entertainment pack). What hardware do I need? Can a TV card achieve this? If so, any recommendations? Any budget within reason..
  2. I'm trying to use Windows Media Center (Win 7) but I can't get it to play my downloaded MKV's. I believe I've tried Shark 007 (x64), WMC, K-Lite and CCCP and I keep getting the same error (says file can't be found, though I've read this is misleading and actually related to codecs). Any advice?
Thanks!
 
Don't have a clue for point number one, but for point number 2, get XBMC, i find it infinitely better than Media Center and it's free.

If you have an iphone/itouch/android phone you can get a free app that will also let you control XMBC via a wireless connection. It's very clever.
 
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