John Walsh,-
The first thing to keep in mind when thinking about audio/video streaming through the house is DRM.
Any legally sold in NA Media Extender will refuse to play back a DVD (or a copy of a DVD, from optical media or hard drive).
There is one exception in the form of Kaleidescape, but I don't think it fits your budget.
To be accurate: the extender will show a DVD that is played - and streamed - on the host computer, but won't play itself a DVD copy from NAS.
There are some changes afoot in this department, but it won't happen tomorrow.
Download-to-DVD now an option for Apple, CinemaNow, others
Hence, you need DVD copies free of all protection: CSS, Region and Macrovision. Studios will hate you but you can show them the finger...
Ripping.
With the exception of some DVDs released in 06-07, there are free tools to make this happen (go to doom9 and you will learn more than you ever wanted to).
Sony is very busy lately in this field: first, they stopped development of 2 ripping programs (DVDDecryptor and RipIt4Me) by sending Cease-and-Desist letters to its developers; second, they employ ArcCos protection that old version can't tackle. Remember, there is always AnyDVD: Cayman Island based company (with half the team in Germany) that can't be shut down and does it all. Including HD DVD and BD. But you have to buy it. Worth it if you are serious about it.
You can rip the DVDs as-is (complete copy sans DRM) or only rip the movie (no menus, extras, multiple audio tracks, etc.) Which one of the options you use depends on what your extender is able to catalog and play.
Compression.
DVDs are 480i MPEG-2.
There are miriad ways to compress them, I'd look into three: XviD, x264 and WMV.
- XviD: Every DivX labelled player for $25 will play it (as long as you don't use QPel, GMC and variable bitrate MP3 while encoding);
- x264: the best quality for a given size you can get. Plays only on PCs.
- WMV: easy, efficient, plays on 360.
I believe just the movie can be compressed to 1GB/hour without losing quality.
I don't have experience with extenders, have nothing to say.
Diogen.