On the 40GB HDD.. Check out the AppleTV www site, it talks about "Sync with iTunes", rather than "Stream from your PC". I bet it will sync the music/playlists, photo albums, and videos of your choice (much like you choose which content to sync with an iPod with less storage than your library). So, your desktop PC will not necessarily need to be on for your AppleTV to work.
This is one area that might improve on my Mac Mini HTPC. It can sometimes be difficult to display remotely shared content.. It works most of the time, but I've had more than my share of hiccups with this.