If I purchase a small and cheap system from dell.com for like $250 with on board integrated graphic chip will that thing be enough to play back movies these days?
I know a few years ago they would not have been good enough and specially not for fullscreen. How about now?

An alternative is to remove one of my pci cards from the pc and put it into the celeron 2,8 system and use that tv out - surely the nvidia fx 5200 with 256mb + tv out will handle it without a problem.

Please let me know if you have any experience with onboard video playback.

Yes I'm aware of computers which produce High Res Tv Output of XVid encoded movies which have little more than an on board GPU.

Care to share which?

I'd have to know which
They're the latest small HP things (Vista compat) which have a gig of ram, Pentium D and onboard GPU. My school just bought 200 of them
Anyway, we've used them with projectors to show xvid movies.