Problem is my TV is not ARC enabled, so I am limited in my options. So what's my best option then, if I am to continue playing films via HDD? If I use a media player plugged into the AV, then can I just connect AV to Tv with HDMI for the picture, and use the AVI to external speakers for the sound? All I want is to ensure the sound is processed via the AV rather than the crappy sound in the TV.
If you get an amp with HDMI pass through (any decent one will have this) you connect your media streamer, whatever it is via HDMI to the amp and the amp to the TV.
That's how mine is set up - PS3, Blu Ray, Media Streamer and Sky box connected to the amp via HDMI.