My 2 cents...
Case: It seems the case only accepts 80mm fans, so it might be hard to make it really quiet. Also with the small dimensions it is going to be a limiting factor if you aim for a decently quiet HTPC.
Mobo: You might consider looking for a mobo with a newer chipset, apparently (if you are going AMD) there is the newly released 780G-chipset with onboard HD-support, eliminating the need for external VGA (might want to wait for a few reviews though). For Intel I'd go for P35 or G33 or similar.
RAM: 2GB should suffice, if you run a 64-bit OS you could go for 4GB considering prices are fairly low at the moment. I've had no problems with either Corsair, Kingstone or Crucial, but choose a brand you are comfortable with - if your mobo supports it go with PC6400 or higher.
CPU: For HD_DVD and Blu Ray minimum recommended processor speed is 2.2-2.4GHz, but this is only critical if using onboard VGA. Using an external GPU (like the 8600) you could probably go a bit lower if you have to.
GPU: 8600GT seems to be among the preferred VGA cards, other options are HD2400/2600 and HD3450/3650. Considering the 8600GT is a bit older it might be easier to find support in the forums if you should run inte trouble, on the other hand the ATIs supposedly have lower power consumption.
PSU: I don't really see the point of a 700W PSU, it's unlikely you'll be using more than a couple of hundred Watts. I'd go with Corsair or Seasonic, something in the 500W range. Visit
silentpcreview.com | Everything about Silent / Quiet Computers and check out the recommended list.
CPU-cooler: Again, visit
silentpcreview.com | Everything about Silent / Quiet Computers and check out the recommended list. Unfortunately I doubt you'll be able to fit a silent CPU-cooler in the case you've chosen considering the height. If you check the SPCR forums you might find a decent recommended cooler.
The Zalman that SetH recommended can actually be a very good cooler (if it fits) if you perform a fanswap - otherwise it might not be quiet enough for your taste.
HDD: Seagate HDD:s aren't exactly reputed to be silent, but personally I find reliability to be a bigger concern, otherwise Samsung might be of interest (but I wouldn't buy one again cause my last crashed within a month).
Sound card: Don't really have any thought on this, but I reckon you'll need one if you skip the receiver. Preferably one with 5.1 analog outputs.
Usability is probably mostly going to be determined by software and the amount of effort you put into customizing it.
Having browsed around quite a lot looking for HTPC information, one thing that strikes me is that in order to have a setup you're comfortable with (i.e. it works good and is hassle free) most of your time and energy will probably be spent fiddling with the software, the hardware is the easy part...
Happy hunting
/Mats