It'll cope with W7 32bit, W7 is pretty good on resources and ran on my now 6 year old PC with 1Gb ram well enough, it comes with Media centre which is good, get a USB DVR stick if you want to record, otherwise play your normal media through it
If you don't like Media centre, there is XBMC or Boxee to play with too, not experimented with other media centres.
Just throwing some of the media centre goodness options out there for you to have a play and find one which suits you