Kevin,
I'm not a big Windows fan either, but I just consider this box a turnkey and don't worry about the OS. As for a hard drive, if you want to spend a little more you can get a nice 64GB solid state drive for around $100 - that should cut down power, heat and noise. As I recall this unit has a fan on the power supply, another on the side of the case, and a small CPU fan. But I really don't hear the machine at all because it is in the basement on a small shelf near the circuit breakers, phone and cable entrances and my cable modem and wireless router.
If I had to go with a PC I would definitely go with something driveless, SSD is a bit pricey but maybe a flash card if it's sufficiently fast. I still don't like the idea of having to maintain/back up the box. And possibly restore it if things fail. Anyway, I don't want a single point of failure, whether it's with an appliance or a PC, so I will have some manual remote switches first, and the automation server second.
But you might want to re-think about cameras. Even if you don't want to use them for security or have them pan/tilt, a couple around the house to spot-check on really important locations that your lights/appliances actually turned off or on or that the garage door is open or closed are a great addition.
I don't want to use x10 for lights, except in 2 rooms in the house. #1 is home theater, where the lights are already controller via IR543 from the couch, XPS3 from the wall, and an RF switch from the next room. #2 is my home office where there is an XPS3 wall switch behind a door, and an RF switch in a better location.
For most of my other lights (200+), I have put in vacancy switches. These are manual-on, auto-off. They turn off automatically after 30 minutes if one forgets to turn them off. The only switches I didn't convert to vacancy are for outside lights so they don't go off unless I press the switch, which is indoors. I rarely have the outdoor lights on except the porch, unless I have a party. For the porch I just put a photocell.
Remember that almost all of the X10 stuff is really only one-way communications - you can tell that you sent a command but you can't be sure that the device received it. The only practical way to do that is to use the Insteon stuff but at $35 or more per device that can get real expensive real soon. And the hardware devices can get obsolete even quicker than a computer. But if you want a little more time before your stuff is obsolete pay the man (Bill Gates) and put Windows 7 on the box (still keeping it turnkey). All the new X10 stuff has been upgraded and works fine with Windows 7. So it will be quite a while before your X10 gear will be obsolete.
Yes, I'm aware it is one-way. But I want to use x10 for controlling a large number of standby power loads, with a lot of transformers. The main way to check that they are really off would be to touch the transformers and see if they are hot or not. And then, only some amount of time after they are turned off, to make sure they have cooled down. Maybe an infrared camera would help for that. But I would still have to wait. And the power usage from the cameras might be more than what I am saving. Not to mention the camera cost, since there are so many rooms. So, I'm really not keen on having any indoor cameras.