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1. Wireless or wired?

IMO wired is the only way to go for simple, trouble free, reliable video streaming. Not only will the microwave cause problems but so will cordless phones. You may also not have great reception thru your floor. You will need to make sure everything in your wireless network is 'g' or pre N. You may also want to get a wireless signal strength booster.

2. The cheapest, simplest and IMHO the best way to view video that is on your upstairs PC on your TV downstairs, is with a media network player. HTPC is not simple and you will need to put the HTPC downstairs near your TV.

I use a MediaMVP for SD mpeg2 video viewing on my upstairs SD TV

I use a Linkplayer2 for viewing mpeg2, DivX, HD ect... on my HDTV
downstairs.

The media players each have their own remote and each has its own server software. When I want to watch my recorded, commercial free shows on my HDTV downstairs I set my TV to Video 5 (DVI input) and turn on the LP2. Up comes an on screen menu, I select the show and press play. I can pause. fastforward, reverse and delete the show. I can also bookmark where I stopped watching a show. Someday I will look into a All in one remote but myself, my wife and my children, have been using this setup for about 9mos and are quite accustomed to it.

My PC, which is also the family PC is upstairs, no need for another PC! We cruise the internet, record shows, find, confirm and cut commercials, watch a show on the Linkplayer and one on the MediaMVP ALL AT THE SAME TIME.

You guessed it, it is a wired connection to both TVs. Tried wireless...spent time and money and it was marginal at best.