Store all my music in a lossless format.
Store all my DVD in a non compressed format.
Be able to listen to my CD on Home Theater
Watch my DVD back on the TV.
The catch is I would like to be able to have the TV on, so I can see what is in the library, like cover art for the album, or details on the DVD.
That's no "catch," this is what most of us have been doing for a several years already with a Mac in the home theater. You can choose to have the TV on, with your Mac's desktop or a "front end" displayed, or leave your TV off, access your Mac remotely, and control those functions. The next rung on the HT ladder beyond 1) music and 2) dvd/video_ts is 3) dvr functionality--tuning and recording high def via OTA and QAM--and many of us have been coordinating that through a Mac as well.
Discussing those three main functions are the reason why this sub-forum exists.
What do I need? I am willing to spend about 2K on this project.
Any Intel mini would handle your music and dvd needs.
Best to wire everything up over gigabit, and not rely too heavily on wireless. Wireless is a nice option that should be utilized judiciously.
Then how much more you spend will come down to 1) how to control the Mac once you've connected it to your display, 2) how large a media collection you have--you'll need to store all your lossless audio and ripped dvds on hard drives; 3) where you want all that storage--right there, directly connected to the mini over firewire or usb or somewhere else, on your network but out of sight, and 4) how diligent you want to be when it comes to backing up all that content you just spent weeks ripping and tagging and perhaps also building in some redundancy against a hard drive failing--and these two concerns aren't the same thing. The more diligent and concerned, the greater the expense--more hard drives, more enclosures, a more sophisticated strategy, etc.
If you already have a home stereo--an AVR and speakers--and you already have the Indigo/Insteon stuff--then you can pull off the "Mac plus storage" thing for under $2K, no problem, even with a large media collection. Whatever "x" you spend on the mini, figure "1.5x" for storage.
I use Insteon in the house, and I understand that I can use Indigo and be able to controll the Mac from Insteon switch?
Well, it's more like you'll run Indigo on a Mac, and you'll use that software to control all your other devices and appliances that you have plugged into Insteon switches. Some folks dedicate a separate computer just to handle their home automation tasks--which can be put anywhere--it can even be run headless, in the basement or in a closet somewhere--when you need to access it, just VNC in from another Mac or device. I haven't used Indigo and the Insteon switches myself. You'll have to head over to the Indigo forums:http://www.perceptiveautomation.com/...wforum.php?f=7
to see how smoothly you can automate a home theater event like "when I walk into the living room, turn on the lights and start playing my iTunes "Emmylou Harris 5 star" smart playlist through my AVR at x volume" and have Indigo pull it off.
But there's no reason why you couldn't run Indigo on the mini that you have connected to the TV in your home theater.