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I use coreAVC pro 1.7.0 for 1080p mkv videos
a 2ghz or better dual core cpu can decode 1080p mkv videos with coreAVC
I use vista media center (comes with home premium / ultimate versions of vista) and one MCE keyboard + remote to manage HTPC
HDMI is a must if you will connect your htpc to your full hd panel.
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