I've built two. I use them with Comcast cable, directly connected to the cable for the 70+ or so basic non-digital channels.
You can also connect it through the box and have MCE change the channels on the box if you buy the Microsoft MCE remote (which I recommend you buy anyway, it's the best remote). The remote receiver has two IR transmitter "bugs" you and tape to the from of your cable box(es) to have MCE control them. Never tried it though. I'd rather not tie up my cable box.
There's lot's of gotchas with MCE. Worst issue is that certain types of hardware do not work properly together. I would STONGLY recommend that you use an ATI Radeon card and not an NVidia card.There's lot's of known issues with NVidia cards and certain chipsets causing a Black Screen of Death problem in MCE (VIA, SiS and ironically even NVidia chipset mobos). No one seems to have any problems with ATI. I had the problem myself and it was aggravating. Switching to a Radeon 9550 solved all my problems.
Ideally stay with hardware that's on the Microsoft MCE compatibility list and you'll have less headaches:
http://www.microsoft.com/windowsxp/medi ... ctory.mspx
You want to be sure to install the MCE version of any drivers (video, audio, chipset) if there's a seperate MCE version available.
PVR 500 might be a waste of money if you're using a cable/sat box. The PVR500 is a dual tunner and if you're using a box you won't be using the 2nd tuner (both tuners MUST be connected to the same type of source - you can't mix a inputs with different channel assignments so you'd need two boxes to use dual tuners). The PVR150 MCE is an inexpensive alternative at half the price (I use one in both my MCEs) which is a single channel PVR card.
MCE doesn't come with an MPEG2 driver - you need to supply one by installing a DVD player or download a generic codec. Almost none of the MPEG2 codecs, however, work properly with MCE. Keep in mind this is NOT just for DVDs - the recorder won't work without an MPEG2 codec either. The only codec that works properly is the one that comes with NvDVD. It's the only one I've found that allows TRUE fast forward/rewind of MCE recordings. Most of the others won't do it at all, or lockup.
Lots of real useful info on the GreenButton forums:
http://www.thegreenbutton.com