I think you need to decide what is more important to you, the ultra small form factor of something like the M350 or the flexibility of something a bit bigger like the LC09B. But I have a few thoughts on your possible setups:
power supply - http://www.mini-box.com/picoPSU-150-...&category=1097
this would work for the M350 but you may want to consider it for the other case because the 60W psu it comes with would really be cutting it too close and probably would not have the 24 pin atx connector and p4 connector for the Zotac.
The M350 is meant to take a 2.5" hard drive although I have seen someone stuff a 3.5" in the case but it will add to heat problems.
The E5200 should be sufficient for your needs but I bought the E6300 for about $10 more than the E5200. If you can get a good price I would highly recommend the E6300.
Wake on USB - If you are not in a big rush to buy your parts the Zotac GF9300 latest PCB version (03), has support for USB WakeUp (S3), Dual Link DVI and an extra SATA connector - but it hasn't shipped yet. If you can't wait you can still do wake on ps/2 or add something like the Antec Mult-Station Basic Internal IR receiver
that wires into the atx power connector.
I am using Windows 7 Beta and it is great, I believe you can still get it and use it for free for the next year (approx.).
The M350 is a great form factor but the size has limitations with respect to your stated purposes e.g. no optical drive, 2.5" hdd and no internal room for more storage or additional cooling.
My system is:Morex T3500 w/ 150w external psu
(92 x 200 x 235 mm )
Zotac 9300 itx
E6300 oc @3.4ghz
320gb wd 7200 rpm scorpio black. 2.5"
AeroCool Streamliner 140mm x 20mm fan
it has room for a slim optical drive
My plan is to use the 2.5 hdd for os and applications and use an external 1 to 1.5 Tb (or multiple drives) hdd for storage
You just need to decide what your priorities are. Ultra small form factor is awesome but something a little bigger may meet your needs better. You may even want to look at something a little taller than the LC09B like an Apex MI-008
- you could probably fit a 2.5" ssd, a 3.5" hdd, a full size optical drive, and a 120mm fan. If you replace the psu with a pico psu you could have a virtually silent system that meets all of your requirements with low temperatures.