I've wanted a good media center setup for years (stupid lack of income), and I've always had in mind to build a home theatre PC (looks like a piece of HiFi equipment) to handle all my media and plug into a sound system and HDTV. But I was planning on building my own system that I could customise accordingly, rather than buying something off the shelf.
1. I know I can access a Network HDD through my wireless network, but is it possible to access the information of the HDD through the internet? Can I access the HDD from across the globe?
Its possible. See Bustin's post.
2. Digital Media Players: what can they really do?
As bustin said, its just a dumb computer. Some of the media players will have storage space. But typically, the media player will stream content over your network from another computer. So essentially what a DMP does is identify shared folders on other computers, read the files on there to a temporary storage, and play the video/music on your TV/speakers.
'Flawlessly' depends on the unit, but if you find a review of the product you're interested in, it'll probably test the performance of the unit. If you've got Fast Ethernet (100Mb/s) or 802.11g (54Mb/s) you should be able to stream most media over your network without issue.
For the rest of it, I'll walk you through what I think is capable currently.
What I want is exactly this: I come home, turn on my receiver and DMP, and play my entire collection randomly. I start preparing some food, then while it's cooking, I look up some new music I want to hear and download it DIRECTLY to my new HDD.
The new external hard drive you have would be plugged into your normal PC. If you're looking for something a bit smarter, google for NAS (Network Attached Storage) devices. Its a network share without powering up a computer. All you need to do is plug it into a power socket and ethernet port ( or inbuilt wireless in the better models). Some even do Bittorrent downloading. But yes, you can definitely do this. And if you share the new hard drive over the local network, it'll become available to your DMP when it is downloaded.
After eating, I call my girl over and put on a slide show of pictures of her while my music is still playing. Later, as we're watching futurama, I decide to record it with my DMP (which then automatically backs it up on my HDD, but it doesn't have do that instantly. If it could be scheduled, that would be perfect).
Don't think you can do recording with all DMPs. Maybe someone else can point to some devices which can.
Later, we watch a dvd-rip of Emperor's New Groove.
Same as downloading a new song - if it is available on the network, the DMP will be able to access it.
The next day I leave for Hawaii and decide to listen to this one song I forgot to put on my iPod. I access my HDD through the internet and stream the song (or even download it), then listen to it. The same should work if I wanted to watch a movie. After coming back from a night at the beach, I upload my pictures to my networked HDD.
See Bustin's post - he's covered a lot of the technical issues you have to get around.
After a week, I come back and find that my DMP media is all backed-up on my HDD and that the original media has been deleted; completely freeing up my DMP for more scheduled recordings.
Many DMPs don't store the media - if you backup your new HDD it'll be safe. You could get around this by having a backup arrangement on your computer which moves new media from #CURRENT to #ARCHIVE but that's going into the technical realm.
If I can have all that with the advanced options of selecting exactly how media is converted (what file type) and when, it would be perfect.
Most DMPs support a wide range of formats, but don't do conversion. You'll know with each model what you can play and what you can't.
I wouldn't mind spending as much as it takes because this to me sounds like the coolest, most seamless media playing/sharing/storing setup ever.
You don't have to spend an arm and a leg to have this sort of setup, but it comes down to the features you want.