Parts Overview
1. Windows XP Media Center Edition, the OS
2. AVerMedia M179, Hauppauge PVR-250, or PVR-350 Mpeg-2 encoder board
3. Philips or HP OEM brand remote control/IR receiver/IR blasters
4. Software drivers and codecs.
Mpeg-2 Encoder boards
The AVerMedia M179 board has seemingly just become available as a MCE capable board, which is at Newegg.com
The PVR-250 can be purchased for around $140 at Insight.com or PC Nation.
Remote Control and IR Blasters
The Philips OEM brand remote control and ir blasters/receiver shown below can be purchased for $33 from Newegg.com.
HP also has a remote and ir blasters that you can order from the HP Spare Parts Store. The info is as follows.

RCM-RCVR-I/R SNOWBALL W/EMITTER EPC
$55.00 (ea)
Part #: 5187-2503
RCM-REMOTE CONTROL FOR FREESTYLE
$12.50 (ea)
5187-1951
Software, drivers, and codecs.
Here is the link for the needed hardware drivers for the Hauppauge Freestyle, PVR-250, PVR-350, and Avermedia M179. Other drivers for these boards may work with the board, but won't necessarily work with the Windows Media Center application. I've posted both the 1.14 version and 1.16 versions here for the Hauppauge boards. I was using the 1.16 drivers for several months with no problems, but then when I installed the IR blasters, I started suffering from lots of audio warbling and distortion. When I dropped back to the 1.14 drivers, all problems went away. On the flip side, some people have mentioned lock ups with the 1.14 and swear by the 1.16 drivers. The point being, use the highest version that works for you. The other hardware in the computer such as sound board and video board apparently affect which driver version will work correctly for your system. Thanks to shspvr.com for originally hosting these drivers.
Hauppauge Freestyle, PVR-250, PVR-350 Version 1.14 - freestyle-1-14.zip - 300k
Hauppauge Freestyle, PVR-250, PVR-350 Version 1.16 - freestyle-1-16.zip - 300k
Avermedia M179 - Thanks to McGuire for supplying these.
Although mpeg-2 encoding is handled by the above hardware devices, playback is handled entirely in software. Since XP doesn't come with mpeg-2 codecs, you'll need to install either Nvidia's NvDVD or Intervideo's WinDVD.
Lastly, The Green Button.com is a fantastic site that has a great community. They can answer tons of questions. Another site of mention is dberrett's new MCE Webguide web application. It turns your MCE into a fully web accessable version of MCE. You can remotely schedule shows, change or delete current shows and even play shows over the network, all from his expertly done interface. Click here to have a look.