What should I look for in a processor/graphics card to optimize HD video playback?

Hey lads,

This will be my first PC build, so my apologies if I'm missing some glaring details. I'm looking to build a full-size PC in the 400-600 USD range for basic photo storage, MS/OpenOffice functions, and streaming 1080p video for Netflix watching and such. If it could support some mid-level gaming (N64 emulation or maybe running Minecraft/low-framerate Skyrim) that'd be marvelous as well. As of right now I have 2x4 gb of DDR3 ram, a monitor, a keyboard and mouse lying around, so that's all taken care of.

I was wondering what combination of processor, cooler, graphics, and motherboard would best support these functions? Would overclocking provide a significant advantage? I apologize for this being pretty far down the spoon-fed spectrum, but would greatly appreciate whatever input y'all could offer. If there'd be huge advantages offered by a minor budget expansion I'd be open to that as well.

Cheers!