*UPDATE 01/22/2014: Still running strong and still used every day.
* The biggest addition I made since the last update is the addition of powered speakers, mounted to the underside of the wood frame under where the keyboard sits. I bought a crappy little portable speaker set from the local thrift store for parts. The pcb is small, only about 2 inches on a side and the circuit is based on the LM386 amplifier. I wired power from a USB port. A small switch turns them on/off. The speakers are probably 1W and have terrible low end response. It's crap, but much better than no sound at all. When I want good sound quality I plug in a pair of headphones.
* The most important modification I made was to add a ground wire to the motherboard and hard drives. The lack of a ground was the cause of all of the hard drive errors I had experienced and which led me to replace drive after drive. On the one hand I feel bad for RMA'ing so many drives to WD. On the other hand, if the drive will slowly fail without a ground connection, maybe it should get a warning label.
* Got a new Logitech wireless (RF) mouse (model M305) with an incredible range and battery life. The dongle is tiny and stays plugged into one of the interior USB ports.
* I had to replace the power cord jack in the side with a new one since the old one wore out and started sparking. I also covered some of the exposed connections inside the case with liquid electrical tape for safety.
* The original plastic handle broke along time back and my quick-fix was to replace it with a kitchen cabinet handle that happened to have the same screw spacing. It's mighty uncomfortable to hold for long hauls but I've been too lazy to upgrade it. I've decided that eventually I will replace this with a rope or paracord handle which will be easy to install and comfortable to hold.
* I'm currently batting a bad wire on the motherboard power connector which causes the 3.3 V rail to drop low (I've seen down to 2.7 V) and the system to hang. Jiggling the wire restores the voltage to 3.3 V. For now, I'm content with monitoring it and jiggling the wire when it drops.
* If I ever get the time, I'm still planning on adding the webcam and microphone. I've also got a design to switch the VGA out to a second, external header so that I can easily attach to projectors and television sets without swapping the VGA connection at the motherboard.
*UPDATE 02/07/2012: I'm finally taking the time to describe the latest state of the project. For those wondering, this has been my primary (read only) computer since I built it. I use it everyday at home and at work. Occasionally I've had to carry it upto 2 miles. It wasn't comfortable, but imagine doing that with a desktop. Here is a list of modifications:
* Wired a [power button / power LED / HDD LED] header to the motherboard. She now comes on at the press of a button, no more shorting jumpers on the motherboard.
* Internal power wiring has been redone with a terminal block for convenience and safety. The monitor is now hard wired to the terminal block instead of using a plug and electrical socket. This configuration saves space and has less exposed metal contacts and wires. I had planned to make the monitor removable, but I scrapped this idea.
* Installed USB headers on left, back, and right sides for a total of 6 external USB ports.
* Installed an audio header on the left side, but it still needs to be rewired. This is a consequence of the motherboard which doesn't use the standard pin arrangement and my header connector is a single plastic block, so I'll have to rewire the thing to make it work. As of now, I'm using the rear headphone/speaker jacks accessible through the rear door or under the keyboard.
* Installed two 80 mm fans in the palm rest which eject air out of the case. The two small fans on the side remain but could only maintain the temperature near 55 C. With the two larger fans the CPU and case temperatures are around 35 C.
* Connected a USB WIFI dongle so wireless connectivity is possible (use all the time at home) but it's not permanently attached yet.
* Replaced 3.5" HDD with two 2.5" HDD running in RAID 1 (linux software RAID). The original 500 GB disk failed. I went through several replacements from the manufacturer (long story) before ending up with the current configuration. At one point I switched to 2.5" drives because I figured they could withstand shock better. They also take up less room, are lighter, and produce way less heat. The mirroring has already come in handy, as one of the drives in the first pair had to be replaced. I'm now left with a 250 GB and a 360 GB drive (which of course wastes 110 GB on the second drive). I have less space, but I'll never use it all anyway.
* Next modification targets include mounted speakers, a mounted microphone, a mounted webcam (I've already bought these parts), and maybe a new processor. I'm also considering rechargeable battery power but only for standby mode which should only require a Watt or so.
Safety Note: This project requires electrical wiring experience as the voltages and currents involved are extremely dangerous. The MD1 is shown in an incomplete state with exposed power mains. Anyone who attempts to replicate this project assumes all risk. Additionally, components are not well protected and care must be taken not to short the exposed electrical contacts (with spilled drinks, dropped screws, etc.).
Components: Cost was a big restriction and I've done my best to choose parts with good value that enable future upgrades. The motherboard received the most important consideration. I bought an open box ASRock 890GM Pro3 microATX board from Newegg which supports USB 3, eSATA, DDR3, processors up to the Phenom II X6, and has decent onboard graphics (at the time of writing). I went with a budget processor, an Athlon II X2 250, but plan to upgrade to more cores in the future. I also started out with a single 2GB stick of DDR3 and will upgrade that later as well. I was able to get a 500GB 7200RPM SATA3 Western Digital hard drive from Newegg as a recert very cheaply. The power supply is a 350W from DiabloTek. Since the MD1 has only been up and running a week or so now, I can't say whether this PSU is a good buy, but I can say that I was surprised at the professionalism of the packaging, which was much better than other junk PSU's I've bought in the past. I'm using a Microsoft wireless mouse at the moment and a Dell keyboard. The keyboard was a special find, since this Dell has very little extra plastic trim. Other keyboards would not fit the case. Finally, the LCD is from a Sony 17in that I acquired from a seller on Craigslist. In total, the project cost me between $300 and $350. It can probably be done for around $300 now that I have the experience and tools.
Other Parts: The case was chosen after much consideration. I settled on an old plastic case for a shoulder-mounted VHS camcorder that I found at a thrift store. I originally had picked out a metal typewriter case, but I liked this plastic case as it was more square, much lighter, and slightly wider. Traditionally, others have used aluminum briefcases, but these typically cost about $25 new and I couldn't find anything used. The palm rest cover was made from a sheet of oak plywood I got at Lowes for about $4. A jigsaw was used to cut the pieces, which are held together with hot glue. Metal brackets glued on at the edges provide support. Screws were avoided to maximize room in the keyboard recess. The power connector and rocker switch at the back were taken from the PSU.
Internal Layout and Construction: More time was spent planning the layout of the inside than on any other phase of this project. I am so far satisfied with the layout. Parts are velcro'd to the bottom of the case so that there are no metal screws, nuts, or bolts protruding from the bottom that might damage the desk underneath. This also means that any part can quickly be removed if it needs to be replaced. The PSU and CPU have tall fans and their position was determined by the positioning of the keyboard which is recessed into the palm rest cover. I wanted the keyboard near the back for a move comfortable typing experience and to provide a front surface on which a mouse can be used. This meant the motherboard and PSU had to be positioned toward the front. This worked out well, as there is room in the back to connect cables to the motherboard. Having the ports flush with the side of the case was considered, so that all were accessible from the outside, but this would require the VGA cable to protrude from the side of the case. I didn't hard-wire the power cord to the LCD because I have plans to make the LCD detachable and free standing. Instead, a normal AC outlet was installed. The power connectors in this area will eventually be covered to protect the user. The hard drive is mounted upside down so that the SATA and power cables don't impact the motherboard. I placed a label on the bottom of the case near the ports to help me remember what the ports are since they can't be seen from the top. The back of the case has a rocker switch for power and protruding bolts, but the tall feet prevent these from touching the ground when the case is stood up, this was very fortunate.
Future Plans and Considerations: As stated before, the choice of motherboard allows for excellent upgrade opportunities for both the RAM and CPU. The hard drive will be sufficient for me for a long time (I don't download movies or music). Unfortunately, I can't fit a discrete graphics card, so I will be stuck with the onboard graphics for the life of the pc. I chose a leading integrated graphics chipset to get the longest life from the GPU. The exposed power connections will eventually be covered and I'm thinking up a way to cover the circuit boards as well to prevent accidental shortage. I have external USB ports shipping from China that will attach to the motherboard headers as well as a power switch and indicator LED's. As of now, I'm using a screwdriver to short the pins on the motherboard to turn the system on, which is very inconvenient and a little dangerous. Finally, I'd like to make the LCD detachable and free standing so that with a wireless keyboard and mouse, the system can be converted into a normal desktop setup, with the main unit resting under a desk.