Joe is working on his new home theater... I have the X1 and love it, so I don't think you will go wrong there. However, now there is a consumer version of the X1 that comes with the right adapters, and a little more user friendly software - the ScreenPlay 4800.

As for speakers, you should look into Paradigm. They are a canadian company that makes a really nice speaker that you can get relatively cheaply - NAFTA even helps you out by making it duty free (since it's a product of Canada).

I've done a bunch of DIY cables, and they aren't cheap. You end up getting a better value for the cables, but you don't save any real money. I know that cables can make a difference, but often buying a cheap cable at target and then upgrading in the future is fine. However, if you are doing an installation (putting the cables in the walls/cieling/etc) then making your own cables is definetly the right call for some of this (not speaker wire - just buy that at Home Depot).

Don't cheap out on the screen. I don't know what a DIY screen will look like, but my GreyHawk from Stewart Film Screens is excellent. Previously I had a mediocre oversized white screen, unstretched, and it wasn't good. Reflective paint doesn't cut it.

Given that I know Joe, I should invite him over to my house to check out my setup... I basically have a great "low end" home theater setup... no component cost more than about $1200...