I was planning on following in the footsteps of another reviewer here and loading XBMC with Ubuntu. However, I went about it a slightly different way and had problems. Since I wanted a fully functional computer that would also let me browse the web on my TV, I installed the full desktop version of Ubuntu 10.10. No matter what I tried, I couldn't get the audio to work through the HDMI port. I fought with it for about 5 hours before giving up.
I then installed Windows 7 Home Premium. I downloaded the drivers from the NVIDIA website and everything was awesome. I then let Windows install 50 or so updates, and the HDMI was no longer working. I fought with it for a few hours, trying to reinstall the drivers, trying the drivers from the CD that came with the box, all to no avail. I suspected it might be a hardware issue, but I didn't want to give up on it yet.
I did a system restore back to before any updates were installed, and then installed all available updates, and THEN installed the drivers from the NVIDIA website and now everything is happy. I installed XBMC for Windows, and it works like a charm. I can play 720p videos from my home server over gigabit Ethernet with no skipping, tearing, etc.
This is an excellent media station to hook to a TV. The only problem is actually that it is so light and small, that the cables that hook up to it (especially HDMI and Ethernet, which tend to be a bit big and bulky) can pull it out of its cradle. I ended up weighing the cables down behind my TV so that it was more stable.
EDIT: I figured out after a few weeks of use that the HDMI sound issue was actually an interaction between the box and my TV. If the TV was switched to the appropriate HDMI input before the computer was turned on, there was only a 50/50 chance that the sound would work. If I turned the computer on and let it start booting for 30 seconds or so before switching the TV, the sound worked 100% of the time.
Further Edit: I have found that XBMC isn't the be-all-end-all of media players. I found that it did start to skip, tear and de-sync audio when playing HD content. Installing the Divx drivers (only, not the Divx player) and using Windows Media Player gives excellent results. I am also able to use all of the features on my Windows Media Center remote control. I have also found that XBMC doesn't do a good job browsing my large music collection, or my large digital photo collection. I have gone back to using MediaMonkey for audio and Google Picasa for Photos. Both are free (or have a free version), so that's still cool.