Is it possible to build a quite htpc for less than $500?

for just the box itself? and no gaming? it'd be very possible if you didn't mind how ugly the case was.

depending on how good you want it to look it could get expensive, but i just pieced together a wishlist (sempron 140, 785g board, 2gb ram, 1tb seagate lp, bluray player, remote control and mt.jade case) for $370. you could spend the difference on a good low-profile cpu cooler and/or picopsu.

An entire HTPC for <$500? Whew...that's a tall order for something worthwhile.

AMD is going to be the best option due to cost. As will a cheaper case with (hopefully) a high-quality PSU included. I wouldn't bother with a single core CPU and I'm not a big fan of that case (Antec NSK2480 is $30 more and the Fusion $60 more), but for the rest, I like what "incorrect" posted.

If you have a computer already, any kind of computer, why not try WDTV? It does not have all the functionality of a HTPC due to lack of CPU power, keyboard and mouse, but it does what it's designed to do pretty darn well.

WDTV is basically a small computer with a remote control as only input device. It comes with some variant of Linux flashed to internal memory and has a graphical easy-to-use GUI. It has 2 USB ports and is capable of mounting any mass storage devices including thumbdrives and HDDs. It can play video in all common containers (.avi, .mp4, .mkv, .ogm, .wmv, etc.) and supports all common video codecs (incl. h.264, xvid/divx) and most audio codecs (incl. AAC, ogg/vorbis, mp3). It cannot play DTS 5.1 due to licensing issue but it can play AC3 5.1 downmixed to stereo. (Or using optical audio outlet, it can pass the audio through to 5.1 capable hometheater system and this includes DTS as well.)

With hacked firmware (WDLXTV), it supports USB-to-Ethernet adapters, and with Samba application pack added to hacked firmware, it can mount Windows shares over LAN (app pack also includes Samba server so you can connect to WDTV from computer's side as well). USB-to-WLAN is not supported by WDLXTV firmware hack natively but it's available as an application. (So combining these two apps you can stream Windows shares wirelessly from a home server.) Also stuff like FTP server, even bittorrent...

Output to TV via HDMI is capable of 1080p up to 60Hz. Also component output for older TV sets.

Cost is around 100 bucks, power consumption around 5 watts, passively cooled.

The only requirement is that you already own some kind of a computer to do web surfing and stuff because WDTV is not capable for such due to several reasons regarding it's input devices and limited CPU power. Video playback is no problem because it's done in HW instead of SW.