High performance/low budget recommendation?

I'd like to build an XBMC box but need to keep the cost as low as possible. My main requirements are...

1. HDMI output
2. Able to play (H264 encoded) 1080p MKV files
3. Able to play Blu-Ray discs (have external drive)
   

Content will be stored on NAS. As far as BDs go, I'm OK with either shelling out to an external app or mounting the drive on the NAS end. As for the OS, I'm leaning toward XBMC Live on a thumbdrive unless there's some significant disadvantage to that.

I have a nice (Antec Fusion 430) case that's been collecting dust waiting for me to come up with the money to do this. As near as I can tell, this looks like the cheapest way to go. Any other suggestions/comments/caveats/thoughts?

Thanks!

Definitely go with an ION board. The one you linked to should work fine. The hard drive would be the second most expensive part, but you said you won't be needing one. You could also look at purchasing an Aser Revo, as those support HD output and are pretty cheap.

Thanks for the response! Any thoughts on how limited I'll be if I want to use high quality upscaling (FFMPEG) features to upscale DVD rips to 1080P?