Right, first, stay away from VLC on the RPi. VLC is unable to take advantage of the hardware video decoding present on the device, and is rather heavy for something that is about as powerful as a Pentium 3 desktop. OMX Player can use the hardware codecs, so that's a good start (just make sure you're either comfortable with the command line, or snag a GUI version). As for Wendell's suggestion, RaspBMC is a great distribution for a home media center, and so I'd recommend using that.
In regards to the kit: how much of that stuff do you already have? The RPi only gets expensive when you don't have most of the things already (how many of us have more USB micro cables than we know what to do with, and USB power supplies laying around?). Cables wise, try MonoPrice (especially if you're in the USA), their prices are excellent, and the quality is good (How could a $4 HDMI cable ever compete with a $100 Monster cable? /s), and given the digital nature of the signals, work perfectly.
Don't let the case fool you either, you can get cases cheap easily enough. I pay $7 for the cases I get. They aren't fancy, but they do the job damn well. As well, you can get a RPi case that will mount to the VESA on the back of your TV (Assuming you have it on a stand, rather than wall mounted).
I will grant you the keyboard is a good deal (even if the keyboard itself is a little small), although you might be able to find another wireless keyboard for less.
Also, as for the HDD question: the RPi runs Debian (typically, as that's what I believe RaspBMC is based on, and the Raspbian is definitely that), so format? Any? If you'll be using it purely on the RPi, I'd recommend a modern format, like ext4, although it should be able to handle NTFS just fine (if you need to detach the drive to load from a separate computer). I'm also assuming you mean a 3.5" external drive, with its own power supply. Otherwise, make sure you get a powered USB hub, the RPi is incapable of sinking all that much current into its USB ports (the bare minimum 500mA, really)
I have a Micro USB cable, HDMI, Wireless and keyboard around. Mainly just need power plug, RPi, case, SD card.
I was going to use a powered HDD.
I'd be detaching the drive to a Win7/8 computer to copy the files onto the HDD, so NTFS is good.
I know nothing of Debian or the command line, but I'm hoping to learn. I first would like to get this setup for video and then hopefully get another for playing with. I really want to play around with Linux, mainly for Maya rendering in the future... So this could be a good starting point.
Any recommendations considering I have some supplies already?
I'm from Australia, so things are a tad more pricey here and shipping times are generally crap.
a dollar more than what I paid for it (probably CAD->AUD conversion and what not), but it's a very simple case, that will do everything you need it to)
RPi B-Model (better to pay a bit more for the extra USB, onboard ethernet)
As for the 5V supply, just make sure it is capable of 1A (the RPi-B wants 750mA at full load, so 1A provides some extra margains). SD card, you can probably get a decent 16GB card on sale. Also, try to get a Class 10 card if you can, the speed is evident over a Class 4 card, and when you're running the operating system from it...