(FORTUNE Magazine) – Recently I had the pleasure of riding in a $190,000 Fleetwood RV equipped with a Microsoft Windows XP Media Center Edition--based computer (the name itself warranted a CAUTION: WIDE LOAD sign). Using a wireless remote control, a passenger could pull digital music, pictures, and video from the Media Center PC and play it on a TV monitor mounted over the driver's head. The next time you see a 39-foot-long, 15-ton RV heading toward you in the oncoming lane at 70 miles an hour, pray that the driver isn't reviewing his vacation videos.

A more conventional use of the Windows XP Media Center Edition software, which has just been updated for 2004 (for the sake of brevity, let's refer to it as MCE '04), is to transform a Windows PC into a home digital-media server, making it a central device for storing, organizing, managing, and playing all your digital media either on a computer screen or through a home-theater system. A Media Center computer does everything a regular Windows PC can, but it's optimized for digital photos, digital music, digital video, DVD video, FM radio, and digital video recording. Media Center PCs offer TiVo-like scheduling, recording, pausing, and playing of TV shows. If you're so inclined, or even reclined, you can connect the PC to your big-screen TV, grab the remote control, and operate your computer from your La-Z-Boy.

People who bought a PC with the 2003 version of Media Center will probably be able to upgrade their machines to MCE '04--which is recommended, because the new version is much improved--but you can't take your current non--Media Center PC and Media Center it. That's because MCE '04 demands a high-end processor, better-than-average video and sound cards, a TV tuner, outputs to a TV set and audio receiver, a DVD drive, lots of memory, a remote control and infrared sensor, a big hard disk, a network adapter, and other stuff. Even if your current PC already has all that, Microsoft won't sell you the software separately.

It used to be that only HP made Media Center computers, but this year the coalition of the willing has expanded to some 40 PC makers. If you don't need or want the digital video recording and the ancillary TV listings, consider getting a potentially less expensive Dell Dimension computer loaded with Dell's house-brand Media Center knockoff, called Dell Media Experience. Along with other PC makers these days, Dell is entering the consumer-electronics business with TVs, music players, digital cameras, and other home entertainment gear. But Dell also sees the PC--a Dell PC, to be specific--as the hub of the home media experience. Hence the Dell Media Experience, which will be loaded on all Dimension and selected Inspiron home computers.

Based on a test using a prerelease Dell computer, Dell does a surprisingly good job of, er, paying homage to Microsoft's software. But Microsoft still rules when it comes to software, so let's dissect MCE '04. The software is a superset of the Windows XP Pro operating system, gussied up for multimedia applications. In other words, coyote-ugly Windows XP has had plastic surgery and gone Hollywood. It looks pretty, but its soul is still Windows XP. And that suggests one of the potential problems with it: Your PC-controlled entertainment system can now "crash" and get infected with worms and viruses.

Actually the beauty is not even skin-deep, because PCs themselves are genetically homely. No matter how much the hardware makers fiddle with design and colors, desktop computers are about as aesthetically appealing as toilets.

Try this: "Honey, would you mind terribly if we spent Jimmy's college fund on a Microsoft Windows XP Media Center Edition 2004 computer, monitor, keyboard, and mouse, and installed it all on the coffee table in the middle of the living room in front of the TV?"

Before your sweetie can formulate a withering retort, follow up with "It comes with a new remote control that's the size of a heart defibrillator. And don't worry, we can use duct tape to hide the Ethernet cable coming in on the carpet from the other room."

Just before you duck, add: "Oh, and it's purple."

Not that an MCE '04 PC is completely unappealing. It's ideally suited for dorm rooms, small apartments--even RVs--and other places where interior design is routinely a victim of practicality.

But enough on the Ugly; here's the Good and the Bad:

Radio and TV options

Good: MCE '04 has added a new radio controller for FM stations, including the ability to pause, rewind, and skip forward on live radio (this is useful only for those Media Center PCs with FM tuners). The 14-day localized TV listings, pulled from the network, are better organized than in MCE '03, with keyword searching, commercial skipping, and other features that are almost as good as TiVo's, making it easier to view and record favorite programs. (Unlike TiVo's, MCE's listings are free.) Video quality can be great when you're watching a DVD on a wide-screen TV.

Bad: There's no way to record your favorite FM radio programs and no local radio-schedule grid. There's no native support for Internet radio. There's no way to record high-definition TV programs and no way to burn recorded shows onto DVD without the hassle of installing a third-party DVD-burning program. (It's in the box on some PCs, an $80 extra otherwise.) Video quality varies depending on your source and your display.

Setup

Good: There are new Display Calibration and TV Setup wizards for tweaking the best possible picture.

Bad: If you had trouble wiring and configuring your home-theater system before, just wait until you add a PC to the mix.

Playing music

Good: The My Music feature, based on Windows Media Player 9, does a nice job with playlists.

Bad: It won't allow ripping of music into MP3 files, but it will play MP3s already in your computer or on CD.

Viewing photos

Good: It's easy to work with digital photos, including rudimentary editing.

Bad: Hmm. If you don't have a digital camera, you might be frustrated.

Add-on options

Good: There are all sorts of plans to allow users to rent and download on-demand digital movies, purchase songs and albums, and play games online, all in ten-foot mode.

Bad: Those on-demand services aren't ready yet.

Overall, MCE '04 is a welcome improvement, but Media Center Edition PCs are still specialty products for gadget gophers and gizmo geeks. I might consider one not for a home theater (mainly for aesthetic reasons) but rather for a desktop theater, with a wide-screen monitor and a good set of PC speakers.

Microsoft is notorious for releasing disappointing software in version 1.0, fixing major bugs and problems in version 2.0, and finally getting most things right in version 3.0. Windows XP Media Center Edition 2004 is basically version 2.0. I'll wait for the next go-round.