First of all decide the role of your computer system in the home cinema. Draw the complete system on a piece of paper first and work out all the required connections between different components. You will have to do a lot of research on the sound system in particular because you can setup sound of your system in multiple ways.
If you want to set up a HiFi home theatre you should upgrade your desktop to core i7 with a minimum of 4 GBs of RAM. Decide whether you want to play media via CDS, DVDS, or through USB drives. If you are a blu ray movies fan, you will have to install a blue ray DVD player in the computer. Blu ray player is about 2 times as expensive as the simple DVD player.
Depending on your choice of display unit, you may interface it directly with the computer or you will have to install a separate card for that purpose. For example, if you wish to connect a LED TV with your computer, it will be connected directly to the graphics card of your computer via an HDMI cable. However, if you are using a projector in your system, you may have to install a video converter card in your computer.
All sound systems have a head unit, an amplifier, and a number of speakers. Head unit takes its input from the computer sound card and then processes it. Cross over is a part of the sound system which takes its input from the head unit, and then distribute the different types of sounds to their respective speakers. Connect the head unit to the computer sound card, and fine tune the sound by changing the settings of the head unit.