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You just need a video card with svideo out, run it your tv. Then setup your video card to have duel display. Some cards require a plugin to do it, others don't.
Our Cable box has been a PC for years now.. Nothing fancy, win2k on some old box we had with svideo out and a kick ass sound card.
Netflix if you want movies, hulu and several other places legally offer everything shown on tv for free... and you can buy ppv to most anything else.
We have a DVD burner/player in it, and a normal player hooked up too.. and a Onkyo receiver that we can patch the sound through if we want, but we don't..
You can also get applications to run your iphone/touch as a remote control for various boxes.
So much you can do really.. it's seems endless.
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