Building a ghetto HTPC out of spare parts and Linux (?)

So I've got a bunch of components laying around from various projects ... probably nothing that I could make into a reasonable machine and sell, but basically everything for my own HTPC except a processor. Usually when I build PCs for people who want HTPC capability, it's gaming PCs that can double as an HTPC, so the specs all work out anyway. I don't have much experience at the low end for HTPCs, so I need a little advice on what I can get by with. Here's what I've got already:

- Intel DP45SG motherboard (LGA775)
- GeForce 8400GS (w/ HDMI output)
- Thermaltake TR2 420W power supply
- Antec 300 case + assorted 120mm fans
- 4GB DDR3-1600 1.5V
- Seagate Barracuda 7200rpm 1TB (that I got for $39.99)

So basically, I'm missing a CPU and an OS. The obvious choice for the OS is Linux since I don't want to spend much money on this ... on the CPU, I'm pretty sure I can get by with a decent dual-core (must be LGA775), but don't know just how low I can go. So any insight on that is appreciated.

Also, as I'm well aware, the DP45SG has some particular audio problems, though I've never experienced them firsthand. Wondering if anyone who knows better can tell me if an El Cheapo $15 sound card is going to circumvent that and get this ghetto rig going for the long term.
Hey there taco. I can offer some of my first hand experience.

My first HTPC build was using a socket 775 E6300 1.83GHz C2D and it handled everything fine, but that was before I went blu-ray so I can't comment on that.
My second HTPC build used an Athlon X2 5200+ 2.7GHz that worked just as good as the E6300, maybe a little better, but it couldn't play blu-ray using the CPU only so I had to purchase a discreet card to offload blu-ray decode. This worked perfectly fine for all HTPC duties until I burned up the CPU... but that's another story.
My latest HTPC, is based on the super-low-end Zacate 1.6GHz bobcat dual core. It plays everything flawlessly including blu-ray with its built in HD6310 video with one exception. It cannot play HD netflix because MS Silverlight doesn't support HA and therefore the CPU must carry the load and it's too slow.

So, my best guess is that you would be perfectly fine using a dual core 2.5-2.7GHz Celeron for your project. The 8400GS should support HA and take most of the load. If not, you can purchase a cheap GT 430 or HD5450 which may also solve your audio card problem... these cards have their own audio chip to pass audio over HDMI while your 8400GS does not.
I'm not terribly concerned about Blu-Ray, as my main use for this would be a cheap way to stream things from Slingbox and Hulu to my main TV. My current "main" computer could handle it no problem, except it's a gaming rig and it's loud as hell, so less than ideal.

Anyway, looks like I should be able to get by with the cheapest of the cheap dual-cores, and might as well try my luck with the onboard sound first and not worry about that audio problem unless it comes up.