I like to use Digital or Optical coaxial (SPIDF), But if you have HDMI, that will carry your sound just as well. Digital to Digital is always better but until you upgrade your receiver I would just run HDMI to the TV then analog to the receiver
$700 will build a pretty sic HTPC. If you can swing it the i3 on a ASUS H55 board is just wicked. The i3 was designed with some of the htpc aspects in mind.
If possible I always try to go with an i3 or a really decent board with on-board video when using other processors like AMD and the lower end Intel processors. The reason I do it this way is because of noise and slot usage. You want your HTPC to make little to no noise at all. Say your watching a movie with scene's that are silent, a noisy PC will become your enemy quick! A lot of these Micro ATX boards come with only one PCI-e slot and a couple of PCI slots. You will want to build your HTPC with the ability to house and use a TV tuner card. TV Tuner cards run better on PCI-e(just learned that recently). I know you said that you wanted to get off Comcast. Just in case you want to subscribe to another service its best to leave your option open.
That video card I showed you earlier you can turn that fan down on it to half speed, It will stay cool and run at less the 5-6db of sound. It also carries 7.1 sound.
So just a quick HTPC build. (a lot of things that we can change here)
This case was developed with Mike Chin on the development team. You can find Mike's work and reviews on his website. He was the guy that designed the P-180 series from Antec. Silent PC Review
Processor and Board i just put in a HTPC build recently(I got a combo deal on it for 35 bucks off)
Blu-Ray player and RAM. I used 4gb of DDR3 Running in Dual Channel, The 4Gb meets the needs of Win7 Home premium x64. It will also help with the caching of the metadata from programs like MyMovies and Media Browser etc. Also you will probably be adding other Plug-ins and extenders to your HTPC once you realize its potential
7 Home Premium and Remote. This remote is distributed under a couple of different distributer names. Its a good and easy to use remote and its cheap.
2tb HD its the 32mb cache EADS model. It will be a little less problematic then the 64mb EARS model from WD. If you don't need 64Mb you might thank me later for this. If you have to have the 64mb cache model then it will work great just understand that you will need to consider things about this drive during setup and future use. http://www.newegg.com/Product/Produc...82E16822136344
All that comes up to $705.82 as of today. There is a million and one things that you can change about this build. We could make it cheaper or make some of it better. Over all this will do really well.
I forgot to ask you. You are going to use this only for an HTPC right. That is the position I took when typing this.
EDIT: I also used an Intel system here because I am an Intel Fanboy. If you would rather have AMD thats not a problem.