Getting video going with MC is definitely a winding rabbit hole. There are all kinds of factors, viz:
--the kind of video you watch (DVD quality, blu-ray quality, 3D, 4K, home movies)
--the capabilities of your computer in terms of processor speed and video card (for blu-ray, 3D, and 4K primarily, especially if you're going to use Red October HQ and any tweaks)
--where components are, i.e., is your computer next to your TV/Monitor? or in another room? or on another floor?
Here's my set-up for two different TVs:
1. The server PC is in our basement. It's a pretty new custom HP build, with an Nvidia GTX 970 card and a recent Intel i7 processor (don't recall the number now, and I'm not typing on that machine). This works well for basic blu-ray and probably 3D (though I don't have a 3D TV, so it's a moot point); not sure about 4K stuff. It's got a number of external HDDs attached with mkved blu-rays and some DVDs, too, along with a ton of audio files.
2. This PC is connected via a 25 foot HDMI cable to my Marantz AVR, which in turn is connected via another HDMI cable to my 42" LG TV (I have an Acer monitor hooked up too, when I just want to work on the computer and not have everything else on). I use ROHQ with some of the tweaks suggested by someone on here, though I forget his handle at the moment. With 5.1 sound, I'm pretty happy with everything: the picture quality is outstanding, the sound excellent (for my ears, though I don't have top-of-the-line speakers or anything), and MC makes browsing a breeze with my wireless keyboard and mouse. I typically just use standard view on this TV, though soon I'm going to get Theater View set up.
3. This PC is also connected to my WNDR4500 Netgear router, which in its day was one of the fastest, and this router is in turn connected by a 50 foot Cat6 cable, which goes across the whole basement and up through the floor to our living room media box, a Mede8er 600X3D (I'll second blgentry's comments about the WDTV Live: I had one of these originally, and they're problematic at best with a lot of video file formats in mkv containers over DLNA, VC1 blu-rays being a case in point; the Mede8er line, though twice as expensive, is much better all around). As I noted in the parenthesis, I use DLNA and stream via the Cat6 to the box either by using the box's own UPNP as the controller or using JRemote or Media Center itself as the controller (using MC via JRemote or MC by itself to "push" files to the Mede8er doesn't work with subtitles on mkved blu-rays, however; seems to be a limitation in the Mede8er's software). My dream would be to get rid of the box and just have an HDMI connection to both TVs, but I'm not sure a 50 foot long HDMI cable works for streaming and I'd have to drill a much bigger hole in the floor, which I don't really want to do.
4. Advantages/disadvantages to these: I've already intimated a few, but the boxes are nice because they're generally simple, so long as you wire them and don't try to use them wirelessly with HD content. The UPNP is sometimes a little flaky on my Mede8er, but overall it's simple, and the picture quality is really good. As I said, though, depending on which box you get, there can be issues with file formats. When you hook your PC up to your monitor directly, without any box mediation, you have to worry about PC specs, assuming again that you're streaming HD content. Slow computers and video cards can cause all kinds of problems with this. And ROHQ's MadVR, if you tweak it, has a learning curve as well, not to mention all the potential frame rate problems you can get with 23.96/23.98/24 frame rates on American 60hz TVs. But once you get it all set up, MC is fantastic for video playback--much better than using a box in my opinion.
5. You could likely use some kind of (wired, ideally) client/server MC configuration, too, but I haven't tried this for video.
