Originally I started with XBMC running on modded Xbox1's but they don't have the horsepower to deal with HD content very well. So I upgraded to the modern version of XBMC running on PCs.
I run XMBC on cheap PCs on every TV in my house... Can't remember the exact specs for them, but they were each built really inexpensively from eBay'd or BlackFriday components, using TinyXP as the OS. You can use a cheap USB IR receiver/remote combo. Much better UI experience than VLC. I am a Mac guy but can build a decent PC for XBMC for half the price of a Mac-Mini.
XBMC will pretty much play anything you throw at it. I have each machine set to access several NAS drives connected to my router. Love the way it automatically downloads artwork for media. Cut my cable, so just rely on an antenna and XBMC for our TV watching.
I set my parents up with a WDTV unit; it generally works fine; sometimes comes across a codec it doesn't like... Not very flexible.
You might want to browse the XBMC forums at
http://forum.xbmc.org/ for some hardware suggestions.