Right. Thanks a lot for the help, this forum is great for help and I really do appreciate guys
I was told by my brother(he is at Uni , studying Music Tech) to sign up to AV forums for advice also. Since then I have been talking to a member on msn. I have decided I am going to save up for a Reciever and a Set of 5.1 Speakers. I have Budgeted £200(A Sony Reciever and a 5.1 set of Yamaha 300W Speakers for £179.99

) for them, and I updated the spreadsheet (post it later)
I am starting to pick up the basics in connectivity now(Inputs / Outputs, Optical Inputs etc) And me and this person of AV decided how I could connect them up to a certain Sony amp. We decided we could put the xbox & tv audio in to the Amp togethor IF NEED BE ( Incase we didn't have enough inputs/outputs etc)
Which motherboard are you thinking of getting as it may have a reasonable sound chip on there already, thereby saving you money on buying a soundcard. (which make and model of motherboard?)
I have decided to first of all get the sound system and stick with the onboard sound as this Asus MOBO gives me this
ASUS P5KC AiLifestyle Series iP35
Audio Output ........... Sound card
Audio Coded .......... Realtek ALC883
Sound Output Mode ....... 7.1 channel surround
Compliant Standards ......... High Definition Audio
All Mobo's around my budget seem to give decent enough sound for the time being. But i am still to decide which to buy.(overclocking features , P45 coming out soon etc)
So I will first start with on board sound and then ,if need be, buy a sound card.
But seriously, do this on paper (or whatever), plan out where everything is going to be placed in your room first

It might then help you see that your speakers can't be placed correctly for both your PC and you TV unless you A) A using the same screen B) Plan on moving the speakers every single time to get the positioning correct.
I measured the room, it is 14ft x 13ft. So its rather square ! I am going to make shelfs my self to put the speakers on , just for them to sit on if you like. If it helps I will take a picture of the room??
Lastly, if your going to spend money on a 5.1 system then make sure you can position the speakers correctly in the room and at the right heights (or at least towards your head). Will you need to buy speaker stands or perhaps wall mounts as well?
Answered partly above. But I think I will be able to place them any where. Picture may help?
Lastly this is my budget(cut all the money bit out) Also, I am getting £90 in the next week as Im working extra at work
New Bedroom Costs.
New Computer @ £740
New 40" Tv @ £500
Sound System@ £200
Total= £1440
Potential Cash if I work once a week until 12/06/2008 = £755
Difference= £685
Sell Samsung TV @ £150
Halifax Account(£1100) @ £250
Difference = £285
So I have £285 to find for my dream bedroom. I plan to sell a lot of stuff I don't use , and will not use in the new room. :
iPod Speakers @ £20
Ibanez Guitar Amp @ £30-£40
Decks @ £40
Clothes @ £75
Oasis cd's on ebay @ £50
Total = Around £200 Mark.
And then there is work( @ £27 a Night, I work atleast once a week MOST weeks, sometimes twice a week , like this weekend

), which I realise I will have to save for the sound system meaning I can save cash from work for them

I will get the cash, may take a few weeks for the sound part/tv but I will find it ! I have always been good with Cash so I am confident.