Ok the only piece of non gigabit that I have is my netgear ntv550. It is supposed to be but hasn't played well on a gigabit network. Anyways, I'll not hijack my own thread. I solve this by having it go through a trendier 10/100 switch before the ntv550 and it worked just fine. That will be in my living room along with Xbox and directv box, none of which need a gigabit connection. So here is what I am thinking.
Master closet with network box will have cable modem attached to router attached to gigabit switch. All the room wires will be plugged into the gigabit switch.
Living room outlet (coming from gigabit switch) will be connected to trendnet 10/100 switch into which will be plugged my NAS, ntv550, Xbox, and directv box. I am not exactly sure what you meant by a separate subnet. Maybe instead of the living room wire in the closet needs to be plugged directly into the router instead of the switch and then configured in the router as a separate subnet? Again, that's just a guess but it sounds right to me :-).
Also, the living room would be an ideal point for another wireless access point. So you are saying I could plug a new router into the wall (with wire coming from the other router or the switch?) and then have my 10/100switch to fix the ntv550 problem and also attach Xbox etc to that router or switch in the living room? I hope I am getting this across without causing confusion. Thanks for all the help guys!