OK, well a cheap tuner will give you decent OTA in media center. Windows 7 or 8(its an addon for $10 after the time expires for a free copy. iirc the free addon is only for Win8 pro.)
For Bluray, I personally use PowerDVD as it works well and was on sale
If you want to rip the discs, then yes, you will need a drive that can read them.
I am not sure if i was misunderstood above, but yes HDMI out from the video card will work just fine audio and all. It was HDMI in that would be the issue.
Depending on the location you live in Netflix can range from GREAT to just meh(it does get better every day).
For gaming, yeah you will want more video power in the end. I know a 7750 is a good mid end card that can play many games(but will need reduced details for performance reasons). It has the advantage of having very low power consumption. This is good for a system that may stay on 24/7
Just if you are interested in what I happen to use at this time for Media Center/HTPC/Web/some gaming.
ATI combo 650 USB(not that great.)
Win7 HP 64-bit
Silverstone SG05
FSP 300 Watt SFX PSU
H55N USB3
I5 750 undervolted(as low as it will go
)
Geminii S + 1200 rpm fan(Globe)
2 x 4096 @ 9,8,8,24 (1333)
1 x 128gigabyte M4 SSD
1 x 1TB WDC blue 2.5 inch drive(real power saver this thing is). Wish they came it bigger sizes, but I want it quiet/low power so this works for me.
GTX 650 Ti(MSI Cyclone II)
It has had changes over the years. So it started with a 4350 then a 5770 then back to the 4350 because the 5770 was needed for something else, then the 650 ti. The hard drives went from 1TB 3.5(seagate) to 2 x 1TB 3.5(yeah that took some work to fit that) back to 1 TB 3.5 then to the SSD + 1 3.5 then the 2 x 2.5 inch drives. All in all it works well for what I need.
Things I have learned from it. If you primarily want media(including Netflix and Hulu+). any dual core should be more then enough and a video card better then the 4350 never hurts as it is even painful with media centers interface, but I DID get he playback job done.
The mid to higher end APU's from AMD may be a good thing to look at. The lower end ones may not work as well with Hulu+ due to a lack of video acceleration and the cpu not being THAT fast.
Games on the other hand, you may want more then the 500 dollar budget.