Folks are using old PC's for a variety of tasks- including home voicemail and fax systems, MP3 servers, and even Boxee PC video systems. Make magazine (one of my other complete faves) offers plans on how to make your previous pc into a home DVR.
The image on the site is fairly big and bulky mini tower wedged beneath the TV-- I have seen case mods appropriate to the form factor that allow for you to make an aesthetically appealing appliance as well (google that one separately).
home dvr system
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