Building HTPC, several questions..

Ok I'm about to put together an HTPC, this will be a few of the parts included:

mobo: link
psu: link
bluray: link
case: link

questions:
1. I'm trying to decide how I want to do sound. I've been told that several vid cards now support audio out through an hdmi port, or via a dvi->hdmi conversion, can anyone confirm this, and tell me what cards do? Would the hdmi output from the board be capable? Would it be up to spec for Bluray?
2. Would this be a good board? I'm not trying to build a monster of a machine, but I want it to be decent. I have an old c2d e6600 sittin around that I was planning on putting in it, and 4gb of ram, with 64bit vista home premium. Anyone have any better suggestions? Really want a micro-atx though because I want to keep it as small as possible and kinda like the case I have specified above.

If all you want is for playing BR and other HTPC tasks(aka no gaming) then just stick with on-board video. The G45 is up to the task. The AMD/ATI 780G is a better option but considering you already have an E6600 that just doesn't make sense in your case. The audio will play out of the HDMI port on the motherboard without issue. Some video cards will allow audio through the HDMI port. DVI->HDMI will not carry sound. You could get buy with a lot less PSU. The Corsair 450 would be good. Or go with the Silverstone PSU with shorter matx cables.