I recently modded an old & cheap XBox with XBMC.
DVD ISOs > USB External HDD > Laptop > WiFi 802.11G > Netgear Wireless Router > Wired Ethernet CAT5 > Xbox XBMC.
I am playing these over wireless link. Works fine. With a wired CAT5 or CAT6 you’d get an even more stable connection.
You can now install XBMC on Linux or Windows on your Laptop or something and then output to TV in bedroom. But Xbox or Mac Mini might be the best.
OTOH - You could buy one of the Network Media Players like Popcorn Hour. To get the best review go to mpcclub.com