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Setup Ubuntu and XBMC

Start by installing Ubuntu to the SDHC card (can install from USB CD/DVD ROM drive or USB flash memory stick)

NOTE: During the installation, configure the SDHC card to consume the complete partition. The format type should be ext2 - you don't want to use a journaling filesystem with a flash card. Also, because you are using an SDHC card, you will NOT want to turn on SWAP (hence the reason you purchased 4GB of memory :-) )
NOTE: During setup, Ubuntu will prompt for if you want to auto-login - yes you do, unless you want to have to type a username/password everytime the HTPC boots up.
Once Ubuntu setup completes, execute the "Update Manager" and ensure you system is up to date
Setup the system to run efficiently from an SDHC card. Following these steps will allow you to minimize writing to the SDHC card.
1. Mount the filesystem with noatime (file last accessed not written), and use ram to hold temporary files.
2. sudo vi /etc/fstab
  Replace relatime with noatime (if relatime isn't present, you want to add noatime to /dev/sdc1.  It should like something like:
  UUID=blahblahblah     /     ext2     noatime,errors=remount-ro     0     1
  
  Add the line:
  tmpfs     /tmp     tmpfs     defaults,noatime,mode=1777     0     0
  
  reboot
3. Setup firefox to use tmpfs as well, open up a browser and in the address bar:
  about:config
  
  right click, and add a new string value:
  browser.cache.disk.parent_directory /tmp
Lastly, turn off gnome-keyring as it is annoying and will prompt you for your keyring password at inopportune times
1. System->Preferenes->Startup Applications
2. disable: Certificate & Log Storage, Secret Storage Service, SSH Key Agent
3. When you are prompted for the default keystore (for example when you are setting up Remote Desktop, just hit <ENTER> twice

For ease of remote management...
For the Zotac boards, you need to install the NVidia ION drivers to enable the HDMI output
1. Download the latest drivers to your home directory. http://www.nvidia.com
2. NOTE: In order to install and build the new driver, please ensure that you have also performed the following:
  sudo apt-get install linux-headers-`uname-r`
  
  sudo apt-get install make
  
  sudo apt-get install gcc
3. Shutdown gdm and do the remaining steps from the command prompt:
  Shutdown gdm: sudo /etc/init.d/gdm stop
  
  Go to the location of the NVidia driver (in my case, on my Desktop):
  
  sudo chmod 775 <filename>
  
  And execute the installation/build script: sh <filename>
  
  If the installer complains about a Nouveau kernel driver, the installer will install a modprobe workaround in /etc/modprobe/nvidia-intsaller-disable-noveau.conf, you must reboot and try the install again
  
  Let the installer update your xorg.config
  
  Once the installation is complete, restart gdm: sudo /etc/init.d/gdm start
For the SandyBridge boards, you will need to update the Intel driver to fully realize the benefit of using a SandyBridge board and the HDMI output.

As I upgraded to Ubuntu 11.10, there is a slight change to getting the window manager to stop/restart
sudo lightdm stop; sudo lightdm start
To update the graphics components to get SandyBridge to show in SysInfo
sudo apt-get install mesa-utils
sudo apt-get install libva1 vainfo i965-va-driver libva-glx1 libva-dev
sudo shutdown -r now or sudo lightdm stop;sudo lightdm start
To verify the various components are working correctly, you can try the following
sudo lspci | grep VGA
sudo xrandr (to show resolutions)sudo lspci | grep VGA
sudo lshw -C video
sudo glxinfo
sudo vainfo (to verify that you are using the Intel drivers)
sudo lspci | grep VGA

Install XBMC (Ubuntu 10.10)
1. First, add the repositories to the Ubuntu package manager. As Ubuntu 10.10 (Maverick) doesn't have XBMC repos yet, we are going to use the prior repos (Lucid). From a terminal enter:
  sudo add-apt-repository ppa:team-xbmc
  
  Go to System->Administration->Synaptic Package Manager->Settings->Repositories->Other Software
  
  Select the team-xbmc repos (there should be two of them)
  
  Change the distribution from "Maverick" to "Lucid", the select "OK"
  
  Close the Package Manager
2. Reload the repositories
  sudo apt-get update
3. Install the XBMC packages:
  sudo apt-get install xbmc
  
  sudo apt-get install xbmc-standalone
  
  sudo apt-get install xbmc-event-clients-* NOTE: this is for the remote controls.
4. Install the USB HTPC Remote Control:
  1. Plug in the USB reader to a USB port
  2. sudo apt-get install lirc
  3. During the package setup install screens, select:
Install XBMC (Ubuntu 11.10)

First, add the repositories to the Ubuntu package manager. From a terminal enter:
sudo add-apt-repository ppa:team-xbmc
sudo add-apt-repository ppa:nathan-renniewaldock/xbmc-stable
Reload the repositories
sudo apt-get update
Install the XBMC packages:
sudo apt-get install xbmc
Install the USB HTPC Remote Control:
1. Plug in the USB reader to a USB port
2. sudo apt-get install lirc
3. During the package setup install screens, select:

Setup and configure XBMC - most importantly turn on VDPAU/VAAPI rendering to off-load video processing to the onboard graphics chip
xbmc -fs &

Playback->Video Settings->VDPAU (NVidia ION)
Playback->Video Settings->VAAPI (Intel SandyBridge)
Setup and configure filesharing (assuming you are sharing your media over a network)

sudo apt-get install smbfs

NOTE: To list shares
smbclient -L //server -U user
NOTE: To use shares
smbclient //server/share -U user%password

Allow someone other than 'root' to mount smbshares
sudo visudo

Add line in "groups" section

##members of admin group
%admin ALL=(ALL) ALL
%users ALL=(ALL) /bin/mount,/bin/umount,/sbin/mount.cifs,/sbin/umount.cifs
To allow others to automount shares
sudo vi /etc/samba/user

And insert the following lines (the file is probably a new file)
username=yourusername
password=yourpassword

Save the file, now make sure no one else can read the file by changing the permissions as follows:
sudo chmod 0400 /etc/samba/user

Setup the directories. I use hardcoded directories in media, then use a symbolic link in my home directory
sudo mkdir v1;sudo mkdir m1;sudo mkdir b1 etc...., v1=videos, m1=music, b1 = blurays, etc

Setup the fstab file
sudo cp /etc/fstab /etc/fstab.bak

Now add the following lines:
//server/share /media/v1 cifs credentials=/etc/samba/user,noexec 0 0
Repeat the above for EACH share you are putting in place

Save the file, and reboot the machine to get the mounts to load (you can do it as root without a reboot by sudo mount /media/v1)

Setup and configure the display

Plug the display into the HTPC box
Using System->Display, set the Ubuntu desktop to whatever resolution you want (e.g. 1280x720 (16x9) 60Hz for 720p)
Set XBMC to use the same display size (after starting XBMC)

Settings->Appearance->Screen->Resolution 720p 16:9

Calibrate your video (very important or the movies will overlap the screen size, particularly if you are using a projector)

Settings->Appearance->Screen->Video Calibration
Adjust the corners so you can see them (upper left, lower right, then subtitle position)

Lastly, set the System->Appearance->Screen->Screensaver Mode->Off

Sound - the most difficult thing to get setup in my opinion. Please be aware that sound generally takes some tweaking based on your particular system. Your mileage may vary by following the steps I used, and it is entirely possible that there is a better way - I'd love to hear about it.

I used HDMI as my sound channel, however you can also use the S/PDIF port or one of the other ports. If you do, the settings in XBMC have to change accordingly (HDMI = hdmi, S/PDIF = iec958)
Apparently PulseAudio and ALSA drivers conflict - which will lead to NO sound in XBMC
Start by removing PulseAudio
sudo apt-get remove pulseaudio gstreamer0.10-pulseaudio
Now purge all remaining PulseAudio files from the system
sudo apt-get purge libcanberra-pulse pulseaudio pulseaudio-esound-compat pulseaudio-module-bluetooth pulseaudio-module-gconf pulseaudio-module-udev pulseaudio-module-x11 gstreamer0.10-pulseaudio pulseaudio-utils pavucontrol
Install some additional ALSA files
sudo apt-get install gnome-alsamixer alsa-oss python-alsaaudio
Reboot
You should be able to hear sound in XBMC once you setup your XBMC settings. To setup ALSA you can use either the GUI or the command line applet (alsamixer)

From the GUI (Applications->Sound & Video->GNOME ALSA Mixer)

From the command line: alsamixer (Note if the channel shows MM it is MUTED)

The screen is too large to show in one shot, so scroll to the right to see the remaining channels
And this is where it gets weird...I needed sound to work in MAME as well as in XBMC. MAME only seems to support PulseAudio reliably, so how to get this system to work with BOTH sound systems involved. I'm going to capture what I did as it FOLLOWED the above steps - if/when I set this box up again I can work on figuring out what steps are not necessary. So, to continue...
Using the package manager, I installed libsdl1.2debian-alsa (which uninstalled libsdl1.2debian-pulseaudio), which led to a nice quiet MAME, so...
Again, using the package manager I (re-)installed libsdl1.2debian-pulseaudio (or you can sudo apt-get install libsdl1.2debian-pulseaudio)
Still using package manager, added pulseaudio (or you can sudo apt-get install pulseaudio )
System->Preferences->Sound, set it up to use HDMI as the output source
Now redo 'alsamixer' (see step 7) as it likely got muted when you installed the other pacakge
At this point, executing MAME from the command line and selecting a game should lead to a nice arcade sound!
Start up XBMC once again, you probably are hearing navigation sounds - apparently pulseaudio is used to provide navigation sounds, HOWEVER, you must disable navigation sounds or you'll get problems saying the sound device cannot be initialized when you try and play your media. Essentially, XBMC has one sound source open, and you are trying to play another one - which leads to a conflict which leads to no sound! To disable sounds, go to:
Last but not least, go back to the System->Settings->Audio Output and ensure that both entries read HDMI. ALSA probably reset one of them to alsa:plug:hdmi which won't work. (or maybe it would - try this later?)
Finally, you're system is up and running. Look for another post on integrating MAME into XBMC for a total media experience.

NOTE: I ran into a strange problem with audio - somehow my XBMC audio was set really low so the audio was inaudiable in SOME INSTANCES - for example, mp3 files were quiet, avi files were quiet, but Blu-ray files sounded just fine, and Ubuntu sounded just fine. After much investigation I finally figured out what was wrong. Use the media center remote and increase the volume, which you'll see the XBMC audio volume increase and you should now hear sound correctly for all media types. So if you can barely hear audio for some playback formats, but can hear it just fine for others, your XBMC audio (not your amplifier audio) has probably been set too low.

That should about do it...your XBMC system is ready for you to load your media and get going. If you are curious, I've put a couple screenshots of my XBMC settings. These work for me...

Audio settings:

Video settings: (Not sure why it shows 50Hz, it has done that for a while - the display shows 60Hz when I use the system)

Navigation sound settings (note: must be OFF or movie sound won't initialize correctly:

DVD (Video) Settings (play automatically, and skip junk prior to the menu):

Power saving: