I finally got my issue resolved! after more than one month.
In the process I have had two technicians sent from Dell try two different kinds of an OEM version of the ATI Radeon HD 2400 Pro. Both of the cards would not work, the original card Dell shipped with the system would not detect my HDTV as an HDTV, it would output a maximum of 1024 x 768 resolution and the colour blue was missing on the screen. The second card was different (different board layout) apparently custom made by ASUS for Dell. This card did detect my HDTV as such and allowed me so select a maximum resolution of 1920 x 1080 very nice but still no blue colour.
After talking to Dell's support team they we thinking my HDTV may not be compatible, or the the cable maybe bad. In an attempt on my part to disprove all Dell's theories, I went to Future Shop and bought myself a retail ATI Radeon HD 2400 Pro, this board was made by Diamond Multimedia.
As soon as I installed this retail ATI card the DELL logo that appears shortly after your system is powered on was in beautiful blue! This happened before I installed the required drivers. When booting using the two OEM versions of the ATI cards the DELL logo was gray in colour.
After installing the drivers that came with the card everything worked nicely, at this point I was happy except that I was out $86 for having to buy this card myself.
Making a log story short, DELL said they will credit me for what I paid for the retail ATI card.
On a note to the audio the Dell system comes with a built in surround sound card with separate outputs making in a pain to hook up to a surround sound receiver.
The Dell system I purchased is the 531S, the low profile version that will look nice on your component shelf. The only down side is that it only accept low profile cards and most of the sound cards that offer a Dolby Digital / DTS surround sound output are full height cards. After some searching I found the Turtle Beach Audio Advantage, it looks like a USB memory stick, and simply plugs into the USB port and offers a standard TOSlink optical output.
Things that bugged me about my experience, according to DELL's support site (the link is on the first page of this thread) clearly mentions at least 5 times that one should use the ATI 9-pin to component cable. This is not the proper cable, it should be the 7-pin to component cable that the retail board comes with. The OEM version from DELL does not include the cable, Dell only includes a DVI to VGA adapter. I had to separately buy this cable from shopati.ca for a total after shipping $34. I think DELL should have included that cable at least their support documentation should listed the correct cable. To make matter worse the first ATI tech also said that the 9-pin was the correct cable. I called ATI several days later and spoke with another tech who told me the 7 -pin cable was correct and that was what the retail board ships with.
The connector looks like and s-video connector and actually it is both, you can connect a standard s-video cable to your TV it will work but it does not support resolutions over 1024 x 768. The 9-pin and 7-pin to component cable are actually wired the same. The 9-pin cable has a piece of metal bend into the barrel connector to prevent it from being plugged into all the versions of ATI card I received. I used a Dremel like tool to remove this piece of metal. So the 9-pin cable can be used as long as you modify the connector.
There is now a new issue I have to resolve, when I try to play a retail DVD Windows media player will not play because of problems on analog copyright, see Microsoft for more details
Error Message: Window Media Player Cannot Play the DVD Because of Problems on Analog Copyright Protection.
Lessons learnt:
1) If you want a real ATI video card do not order it from Dell as they only have the OEM versions, if you intend on hooking this card to and older HDTV that only has a component video inputs you will have to buy a separate cable and the retail version of the card.
2) Never trust tech support on the first call, call back and talk to another support person you may get different information, I did.
Bottom line: I bought this machine as and alternative to a high-definition media player, I used to use a Roku HD1000 and was considering some of the new ones like Eureka, Mediagate, Tomarco, TViX, all of this are not perfect and each one has their own issues.
The TViX currently costs a little over $400.
Dell had a sale which included a ATI Radeon HD 2400 Pro, the specs alone on this card sounded perfect for my application and the price $399.
If you are looking for a high-definition media player the Dell system is the way to go. Some of the others do not support H.264, Matroska encoding, with a computer it can play everything with your choice of player. It can display your cameras pictures in Hi-def it can surf the web, all the things you can do using a computer, this easily make it the better choice over a standalone high definition media player.
I just wish it would have been less of a hassle getting the machine up and running to my satisfaction.