Hi there,

I am pretty new to this whole area.

I am planning on setting up a media server with all of my movies stored so they can be watched over network via a HTPC.

I have settled on video encoding with x264. However I can't make up my mind about whether I should leave the audio AC3 stream as is or rencode to AAC 5.1.

I can see advantages to both. Leave as AC3 there is no loss of quality and also will be very close to Bluray and HD-dvd spec. However AAC 5.1 should save space and is the mp4 standard and can be muxed into mp4 container.

I am leaning towards aac 5.1 encoding with the winamp encoder (CT based) but am not sure what bitrate to aim for. (As an idea for all my CD's I am happy with LAME at -preset standard which gives VBR about 192 kpbs).

What do people think I should do?

If you use 192 kbps for the 5.1 AAC encoding you will save about 100 MB per hour of video. I'm not sure about your encoding methods (what size you aim for, etc.) but IMO this is only worth the effort if you target 1 movie per CD... which you probably don't.

You can use CT @ 96-200kbs for 5.1 encoding and you shouldn't get any artifacts in sound, CT is very good with 5.1 encoding comparing to Nero 6/7 which is very terible.