As I said, modifications can solve the issues, but would still be a whole lot bigger than a thumb drive or ipod if all you are using it for is music.
As for the power supply, I'd probably look to see if I can find an adequate power supply that has the voltages and power needed that will run straight off the car's 12 volt. With more and more people installing car-puters I would think it might not be as hard to find a power supply that would do just this.
I'd probably try and keep the drive, personally. Wireless G is relatively slow for streaming a large amount of data over a network. And I can't find any N routers with 8 ethernet ports. Hell, with all the headache I had getting my G router with 8 ports to work, I'm not sure I ever want to remove this one. That said, having the drive made it possible to rip my DVD's rather quickly. Maybe 10 minutes per movie. Its been a few years since I had the G so I may be a bit fuzzy. A fast wireless might make sense if you keep ripped movies on your drives at home already. It was also needed to rip my XBOX games directly to the drive. I'm sure it could be done through a PC, but that would be a hassle considering it could all be done on the XBOX. If anything, convert the controller ports to USB and use an external.
MinisterofDOOM wrote:Much better option is just to buy a nettop. Specifically designed to be compact, efficient, and cool, and they're positively DIRT cheap (as in a couple hundred bucks). Boot whatever OS/media software you want on it, throw in a touch screen LCD, and you're ready to rock. You can even find them with bluray drives, although those ones are pricier (but still under $500).
A carputer would be fun. I could probably fit one in my center console and replace the DVD player. But I barely use the DVD player as it is. I could pretty easily get internet by tethering my cell though. Not sure it would be totally useful for me though.
Thinking about a little more though, Zotac makes some Atom powered mini-ITX boards that use an external power supply. Thus, the board has what looks like a standard sized DC connector. Not sure what kind of voltage it uses, but all you need is something to regulate the voltage to the needed voltage. Their specs say its 19V/90W though, so you would need something that can step it up. They all seem to use a NVidia 9400M chipset as well. Though HD on a typical 7" screen in a car would seem unnecessary. All one would need is RAM and a SATA HDD (preferably built to handle higher shock loading). An external DVD drive would do the trick if one needed to rip DVD's and CD's. God, I'm tempted now. I'd end up spending way too much on such a project though, just making it more car-friendly as far as controls are concerned.