I've got something like this sitting in my living room, but instead of using a 1U rackmount server, I opted for a Mini-ITX system with a LIAN LI PC-Q25B case.

I've got something like this sitting in my living room, but instead of using a 1U rackmount server, I opted for a Mini-ITX system with a LIAN LI PC-Q25B case. It's quiet, holds tons of drives and actually looks like it belongs next to the TV (I run XBMC on it as well). It was pricer than the OP's configuration, but it won't keep you up at night (and bleed your wallet in power bills).