I'm also running a P4 2.4Ghz utilizing 1GB RAM. The processor wasn't pegged as it was running a 1.4GHz processor. I don't see any reason to upgrade your hardware as of yet. Try it out first and i'm sure you will be happy with the results with the system you have now.
Yes, a sound card capable of 5.1 is certainly a necessity (IMO) if you're going to be doing movies. 6.1 and 7.1 is attractive, but not necessary as most movies i've seen only release in 5.1 anyway (of course receiever will process 5.1 to 6.1 or 7.1 itself). Depending on how you plan to connect the PC to your sound system (ie. speakers directly, TOS link, RCA digital, etc...) will depend on what sound card you might like. Someone posted a like to a nice inexpensive card in Waterfowls thread in this forum, which would be good for suppling a digital signal to a HT receiver.
I suggest using FFSshow with the DeScaler 5 MPEG decoder (free) rather than the sonic cineplayer (I think about $15-20) one that is listed in a how-to guide listed in these threads. DeScaler 5 decoder is just as good and is free.
I don't recommend overclocking your Dell motherboard. (actually I don't think that is possible anyway).
Lastly, and most important... don't worry about your HTPC now anyway... take the time to do your PJ, and you will be very happy with just a simple windows destop being projected at 120" !!
Enjoy the ride...
cheers,
gs