When something is streamed from a hard drive it still must go into the system RAM to be able to be used.

Streaming is just a technology that allows audio/visual to be played/started even though its not fully loaded into RAM.

Hard drives are ONLY for storage, and in the case of PC's for a "pretend" RAM area. Even if the Audya is using a part of the hard drive for a pseudo ram (swap sector) technically it is still RAM, and the sampels are being streamed to there if there is no dedicated RAM space left.

Also interesting to note, not only does the Audya have USB 1, it also STILL uses the much older(read slower) IDE interface technology for the hard drive??!!

I would have thought it would be at least at SATA level. Much quicker transfer rates than IDE, and well suited to streaming.