I've successfully installed Windows 7 Ultimate 64-bit with all the hardware supported and it is running perfectly. There appears to be no problem with the surround sound either.
Windows 7 Experiece Indexes ;
Processor : 4.1
Memory : 4.9
Graphics : 4.7
Gaming Graphics : 4.7
HDD : 5.9
Tech Specs are;
* Intel P4 Prescot 630 Series 3GHz HT Processor (I have a Prescot 660 Series and have tested this machine with it and noticed massive performance increase but at hugely inflated power consumption. Not good for the poor little aged 220 Watt PSU unless dismantled and thoroughly cleaned - do not attempted unless you are a trained electronics service engineer!!!
* 2 GB OCZ Platinum Edition 2,3,2,5 DDR2 SDRAM
* ASUS Geforce 7600GS 256MB Passively Cooled AGP Graphics Adaptor attached to a Toshi 1920 x 1080i LCD TV
* Hitachi Deskstar 2TB Hard Drive SATAII 7200rpm 32MB Cache
Tested 720 wmv video without any stutter or sync problems. (Without installing any Codec Packs)
Tested 1080 Xvid (AVI) WITH a little stutter but no sync problems. (K-lite Mega Codec Pack & 64 bit extensions installed) Suspect this is due to the poor AGP throughput.
Tested the same 1080 Xvid with VLC Media Player 1.0.3 (32 bit) and found it to be worse.
Updated GPU drivers via Windows Update and re-tested but
So far I have tested and successfully installed the following OS's on this machine
Fedora 12 32 + 64 bit (with fire-wire capability)
Ubuntu 9.10 32 + 64 but (with fire-wire capability)
Linux MCE 32 bit
Windows XP MCE 32 bit
Windows Vista 32 + 64 bit
Windows 7 64 bit
Conclusion - If you want to watch full HD video and enjoy surround sound, get a system that has a PCI Express Graphics Adaptor, but if you plan on using this system to watch 720 HD vids and surround sound, then it will be fine!