I still use my DXR-3 card that came with an old Creative Labs DVD kit. It's got a dolby digital output on it as well as an S-video connection. Both plug straight into the stereo and TV. I get perfect sound, and pretty much perfect (for a non progressive scan DVD player) video output as well. It's ages above ny Geforce TV out and the ATI I had before it (was an old ATI though). It's a simple PCI card. The only drawback is that it needs mpegs, not avi's, which take up a bit more space. But using Gordian Knot, I can rip a movie in about 15 minutes, encoide it in two steps within the next two or three hours, and then watch it at about 95% of the quality of the original DVD disk itself.

However, if I was you, I'd skip all that... buying more PC stuff, farting around with it, and ripping all those damned movies. I'd highly recommend getting one of those 300 or 400 disc CD/DVD changers and just loading it up with everything you have. Throw the cases away or whatever if they bug you sitting out. It would be a few hundred bucks, about the same as a new large drive plus soundcard plus video card. It will be flawless for the job, and only take about 15 minutes total, if that, between unpacking and watching a movie.

Doing it via the PC is fun, but I'd say just get it over with and get a player that can store the discs as well. $399 from Crutchfield: http://www.crutchfield.com/cgi-bin/S-Ek5SvNksDmM/ProdView.asp?s=0&c=6&g=54500&I=158DVPX860&o=m&a=0