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Given this cable company setup with the "family package", does one need 2 cable boxes as inputs to the TiVo? How does all this get hooked together so it can do its thing while we watch other stuff?

Until recently, only DirecTV Tivos would record two things at once. If you want to do that with cable, you would need one of the newer "DT" Series 2 Boxes. Since these are new, I don't think it's possible to buy/find one with a lifetime subscription.

You do not need two cables boxes on one tivo for these DT units. They cannot record from two cable box inputs at once. If you're using a channel only available with the cable box, the tivo will only be able to record another channel in the background that is accessible without a cable box.

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I can stick any old IDE hard disk in this thing, right? So I don't need to worry about getting a lower capacity unit?

Yes, all tivo units are easy to upgrade if you have PC skills.

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Do the series 2 models all have ethernet capability, or capability to add it? What about 802.11?

Most don't, but some (like the DT boxes) do. If a Series 2 doesn't have an ethernet port built-in, it can be added with a USB ethernet dongle. 802.11b/g is also an option.
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-Rob Riccardelli
80GB 16MB MK2 090000736