It's not C2D E8400 but HD 4870 that is the major source of the heat. Scythe Shuriken is a "wrong" choice. You should choose *BIG* Shuriken, then ODD would fit fine. Look at these pictures.
There are a couple of upgrade paths. As E8400 is fast and cool enough for a dedicated HTPC, the best bang for your buck may be
- Replace the graphics card with HD 6570 or HD 7750 (you will see ~50W power reduction at idle). HD 6570 is powerful enough (e.g. HIS passive heatsink version). HD 7750 is the latest and recommended if you have enough money (e.g. HIS).
- Add a SSD for OS, that significantly increase the overall system performance. Crucial m4 64GB is enough for HTPC. m4 128GB if you are going to install lots of programs.
If you build from a new system from scratch, you may want to wait for Intel Core i3-3225 (processor with integrated GPU), that is to be released soon (June-the end of this year).
Actually SSD speed does not matter for HTPC. The most important as an OS drive is random read/write and every SSD is a lot faster (like 20 times) than HDD. "Faster" SSD are fast in sequential read/write, that's important for, for example, Photoshop and games.
As for reliability, Intel 330 Series / 520 Series is one of the best. User reviews of Mushkin Chronos 60GB (no so good, isn't it?). I recommend Crucial m4 (the best combination of speed, reliability and price).