XBMC is by far my favorite media-center software. Recommending XBMC is easy, too, because it runs on Windows, OS X, and Linux. In fact, the OpenELEC folks have even crafted a bespoke Linux distribution designed specifically for XBMC. I played around with a beta version when testing Zotac's awesomely tiny Zbox nano nettop, and now the official 1.0 version has been released to the public.
If you're unfamiliar with Linux, don't worry. Configuring OpenELEC to run off a hard drive or other media is no more complicated than flashing a motherboard BIOS. I could walk my mother through the process and be done in less than 10 minutes, download time included.
OpenELEC 1.0 is available in multiple flavors for different hardware platforms. There's one specifically for AMD Fusion APUs, for example, and another for systems running Ion-enhanced Atom CPUs. You can even grab a variant tailored for the Apple TV.
Smooth video playback is kind of important for a home-theater PC, and OpenELEC uses the decode logic built into recent Intel, AMD, and Nvidia graphics hardware. The Broadcom decoder chip found inside some Atom-based systems is supported, as well. So is a wide range of network adapters and remotes, making this one sweet little operating system for the living room.