I don't know about lesser resources. You can set it up to use more resources or less resources then WinXP. It's up to you, realy. If you use a full-fledged desktop enviroment the resources are the same for Linux as WinXP. However if you run a minimal enviroment such as IceWM you can reduce resources used by quite a bit.
The distros are pretty much the same, too. I like Fedora, but it doesn't do mp3's or DVD's out of the box because of the legal issues. You can fix this easy enough by installing apt-get from
http://dag.wieers.com/home-made/apt/
However Mandrake or Suse are just as good.
You may want to check out Ubuntu. It's very nice and Debian-based (which in my opinion is the best Linux distro currently aviable, but other people dissagree) It has the same issue as Fedora and the legality, but it has directions on their website in the FAQ section on how to setup dvd playback and other stuff.
currently people seem to be most excited about Ubuntu. It's aviable at
http://www.ubuntulinux.org/
For the HTPC software check out
Freevo
Currently the top of the line is
Mythtv and that will do the TiVO-like time shifting, but that requires a fast computer.
If you don't already have a TV card and don't want to spend a lot of money get a cheapo software-based card that uses he bt848 or bt878 chipset. These will run in Linux without any (or much) extra effort. Such as the Hauppage WinTV. Many cards do not work, most noticably the newer ATA All-in-Wonder video cards.
I have a ATI Wonder VE tv card that does work, but it uses a different chipset, a bt848 one. The AIW cards use a different ones.
The driver is called "bttv". So they are called bttv-compatable cards.
Top of the line cards include hardware encoding hardware, and these go best with Mythtv, these are the Hauppage WinPVR-250 and WinPVR-350. These require special drivers, though.
For a low end machine I'd stick with Freevo.
edit:
The nice thing about the more expensive cards that include hardware encoders is that they reduce the load off of a system's cpu. A 900mhz is enough to do decent enough recordings off of a tv using a software encoder, but not for time-shifting. If you have a hardware based encoder then your machine MAY be fast enough for Mythtv. But with freevo you get 90%, just no time-shifting.