Well I'm back in the UK after 16 great days in Canada. Some of them were less great because the computer kept crashing and I ended up having to reload vista after a BSOD in just 2 hours before leaving for my flight home.
In the end I settled for ATI TV Wonder 550 PCI cards, I got them on offer as a 2 pack for just over $100, there were some a few bucks cheaper but they didn't have hardware mpeg2 encoding. I have used a cheap nvidia 7300GS card I bought with me from the UK, it won't win any gaming prizes but it can handle hd content and came with the breakout cables to output in hd. The only drawback to this is you get no display from the component cables until the windows drivers load, meaning you still need a monitor available for when (not if) it crashes. But it's definitely better than the integrated graphics.
The MCE part works well and the guide is good, usually 14 days, infinitely better than the 4 or so days on the star choice hd dvr box they have elsewhere in the house. From the postcode it successfully offered me a choice of cable or digital cable and then downloaded all the data.
As a computer it looks good on the 50" flat panel with vista fonts set to 120dpi, when funds allow they are going to get a bluetooth keyboard so they can relax on the couch and use it.
On my last reinstall I have left it with automatic updates disabled as the crashing problems seemed to coincide with microsoft's updates and using system restore either caused other problems or completely wrecked it. Time will tell wether it is a more serious or hardware problem. I hope it lasts as I am not likely to be back in Canada for some months.
Thanks for the advice