The ideal WMC configuration in many people's mind is having Windows Home Server 2011 with Media Center. Since Media Center isn't supported in a server OS, the next option would be to run Windows 7 in a VM. I wasn't happy with this setup for two reasons:
1. Windows Home Server 2011 doesn't have great native support for dealing well with storage; many loathe Microsoft the removal of Drive Extender (DE), without providing similar or better functionality.
2. Windows Home Server 2011 doesn't have Hyper-V role, which would relegate me to running a less optimized desktop VM.
The aforementioned issues are easily cured by installing Windows Server 2012 or Windows 8 Pro. Both include Hyper-V role and both come with Storage Spaces. Additionally, both have features one would look for in Windows Home Server, such as the ability to back up desktops on the local network. This write-up will be geared towards Windows Server 2012, however rest assured that almost everything I'm writing about I've also tested in Windows 8 Pro. I just prefer running a Windows Server because it includes ReFS, has a slimmer profile for the HP N40L (especially without the GUI interface) and is easier to administer (with more server features).
To get everything working fist install Windows Server 2012 or Windows 8 Pro and enable the Hyper-V role as well as the .NET Framework 3.5 feature.
Windows Server 2012:
Next, install the latest Ceton InfiniTV Windows 7 Beta drivers on the host OS. The reason I went for the beta drivers is to be able to upgrade the InfiniTV's Hardware firmware due to the minimum requirements needed to setup the host to share the Ceton InfiniTV to other machines on the network.
Next, in Hyper-V manager, click on "Virtual Switch Manager..." and add a new External Network.
Now that that's done, we need to configure Ceton InfiniTV to have a different IP which makes it visible to the local subnet. I used these Missing Remote instructions. The only change I made was bridging to the virtual ethernet, since that's already bridged to the physical.
If everything was done properly, you should now be able to see Ceton InfiniTV as a media device in Network Connections
override Digital Cable Advisor (DCA) to get everything set up, otherwise (at least on my HP N40L Micro Server) there won't be enough horsepower to pass the test natively.
As of this writing, channel switching is slightly more sluggish than I'm used to, however not terrible. I've made absolutely no optimizations to Windows Server 2012 Standard host nor the Windows 7 Ultimate client. Additionally at present both are running on an HDD as I'm running this as a "beta" setup. As soon as I get the chance, I'll move everything to an SSD drive, which in my experience runs VM's indistinguishably fast from bare-metal.
The screenshot of the Task Manager below was taken from the host machine while the Media Center client was streaming two HD broadcasts to two of my TV's.
Overall I'm very satisfied with this setup at present and will tweak it going forward. There are a lot of benefits to running Windows Server 2012 or Windows 8 Pro as the host OS and I'll be writing about those in the future.