Your $400 budget is the most difficult part for me to come up with helpful advice, i feel bad!

When I got a new desktop this year, I transferred my previous desktop ( a beast!) for my htpc. I friggin love it. But yes, it is loud. i don't know how much an equivalent would cost, but most of the parts would be discontinued anyway, and it would be way over $400. but basically, it's a full desktop computer with an i7 chip and 4 GB of RAM, and a 2009-middle of the road graphics card. That's pretty much it. I paid $3k for it 4+ years ago, so it should be way cheaper now.
Now, my exploration has been VERY similar to yours, so I'll just explain it, maybe it will help. I messed around with XBMC, JRiver for a while. But I found I was too used to the desktop experience. So all these years, other than my experiments, my main setup is as a normal desktop. I use regular desktop software...Light Alloy, Daum Potplayer to play videos. An air-mouse for the cursor. A wireless keyboard (very seldom used). Directory Opus for the file manager. Now, for years I also used a tube-TV. The graphics (other than full screen video playback) looked awful, but it didn't bother me enough to change. Now I have an LCD screen and it looks BEAUTIFUL. Even 20 feet away, it's totally legible, with just normal font sizes. I highly recommend getting one, if you are willing to spend. So now, I'm not even that motivated to try other things like xbmc or jriver.
Everything is so fast on it. The control, as you say, is awesome. When i go to other people's houses and have to mess around with all their remotes, and tivo, and their cable "guides", and typing in the letters with teh directional keys, ugh, I get impatient. i love double-clicking and going from window to full screen. I love changing the volume with the scroll wheel. I use foobar for audio, love it. I know the computer is way overkill, so you can do it with much less also. but because it's overkill, 1080p playback is instant, i love that.
The fan noise is significant. It doesn't bother me, but now I just went and listened to it...if you like silence, yeah, it will bother you. But I looked at cases recently, even for smaller form factors, and i think you can find some with large 200mm fans on them, and those are relatively quiet. That might be the deal breaker though. and the price of course.
I think the most important thing I learned about my htpc experience is:
--I just like using DOpus for picking the files. I was really into the idea of doing the xbmc thing and properly organizing and tagging everything, but now I don't care. I'll only do it now if i have a lot of time to spare and am into a new project.
bleach...i've talked a lot. i should just take a video of me watching shit and post it.