My chosen media software for my HTPC is Media Portal. It is I think just as slick (if not better) as Vista's MCE, but is far more customisable, plus there is a huge fan base writting 3rd party plug-ins for many different applications.
The following instructions is my current configuration, along with screen shots and instructions on how I use the software to get the results I require.
Current Configuration (September 2009)
Media Portal Version: 1.0.2
Skin: StreamedMP 0.9.601 (Includes MyEmulators, TVSeries and Moving Pictures)
Media Portal Plug-ins: Arcsoft xxxxxxxxx plugin
Blu-Ray/HD-DVD Playback: Arcsoft TMT 3
Other Software: CoreAVC codec, SAF codecs, Deamon Tools Lite, ATi latest Drivers, Soundgraph iMon software.
[*] Installed MediaPortal version 1.0.2 and the 0.9.601 version of StreamedMP (ignoring the warning as the newer StreamedMP relates to the MP 1.1.0 build) and using the basic menu.
[*] Configured MediaPortal to look at my appropriate folders for Films, TV series and Music.
[*] In MediaPortal Configuration > Plug-ins, I configured the TVSeries and Moving Pictures, rebuilding the databases.
[*] Installed the Arcsoft plugin from here - this is setup to point to the uDVDPLAYER.exe
[*] Configured the Basic Start Menu within StreamedMP configuration to remove TV, Settings, Plugins, DVDs from the start menu, and added the Arcsoft Plugin as 'Play Bluray.
[*] Configured the iMon software to add the MediaPortal.imo file for remote control setup.
[*] Install the SAF codecs from MediaPortal; following the instructions (apart from the PowerDVD codec part)
[*] Installed DirectVobSub for MKV's with external subs.
Movies: They launch in the internal player and with the MediaPortal.imo, the remote works very well indeed, better than I had set it up for KMPlayer (I didnt see a way to force incremental Fast Forwarding like the internal player does). Opening and closing Movies are seemless, more intergrated and have a polished feel.
I do however seem to be missing subtitles from MKV's with embedded subtitles (not ones with .srt files). 
TVSeries: The menus all look spanking as usual (they have added the logo above the series info on the left with the episodes listed on the right and fan art in the background) and avi's play correctly.
Play Blu-Ray: This menu selection seemlessly launches the Arcsoft Player and autoplays the media in my optical drive.
Music: All setup ok, works beautifully, and with the MediaPortal.imo, I can actually stop a song (before I had to exit MP).
Baring a few niggles [see 'To Be Resolved' below] very happy with the changes I have recently made.
To be resolved
 I need more experimenting with AnyDVDHD. If it autostarts, then when the HTPC starts, it launches a a blu-ray that may be in the optical drive. If I dont have it on, then when Arcsoft plays, ANYDVD is not on, and it means I have to sit through trailors etc. Grrrr.
 Subtitle problem. Embedded Subtitles not playing in the internal player.
Older configurations (for my own purposes really) can be found here