I salvaged an old processor (E6750), bought a cheapo motherboard and salvaged 2GB of DDR2. Used an old disk drive for boot drive, used my old Vista OS.
Graphics doesnt need to be massive, think I got a HD4350, cheap as chips.
Power supply I bought the cheap antec one thats now £30.
The most expensive bit for me was the case as the asthetics had to be right for other half. Bought a silverstone one that was about £80 from memory.
I am sure all in you can get setup for about £200, plus storage. Depending what bits you can salvage you can take chunks out of that budget, or upgrade to mush better parts should you need to.
I do all my ripping on my quad (strip subs, foreign langs etc), and use an external HDD to transfer to my HTPC.
I also have a external HDD mount so I use up my old sata HDDs to store my series etc on them. Sorta of defeats the point of a HTPC in a way, but they take up less space than loads of DVD cases and allows the DVDs/Bluerays to be stored in the loft out of harms way.
I will probably rebuild at some point with better components and do some serious soundproofing, new TV cabinet vibrates where as old one didnt ^^