Any opinions on this setup with regards to functionality with ambient music? I'm trying to be realistic with my current budget as i'm not going to be able to spec out a fully versataile unit that is capable of everything straight away.

This looks great. Two small suggestions: First, I would drop the mult. You don't need it, and you can use a couple of stackcables instead. Second, you probably need a way to get interesting non-fluctuating pitch voltages (apart from the PNW's random voltage). For this, you could add an S&H (e.g., Doepfer A-148 or MI Kinks) or a quantizer (e.g., Doepfer A-156). Alternatively, you could add a Disting Mk 4, and it will do S&H, and quantizer, along with about a hundred other things that you will eventually realize that you need.

Other than that, start with a case that is way bigger than you ever imagine you will ever need. Go slow. Have fun. :)

Ok cool thank you for the advice. I am planning on buying a 104hp 6u rack, I just like the aesthetic of the 3u on here when i have so little modules. I intend to include Tune by 2hp, so along with PNW and Arp, do you think that will enable me to input pitched sequences in selected musical keys? Thats an area that is still mystifying me slightly.

Don't worry about aesthetics at this point. Keep in mind that you're going to want to go through numerous builds on MG before committing to the actual device. Also, using an overly-large cab in your MG build will help in that you can overbuild, then pare things down to something approximating your final result. But again...expect to do that a number of times before you start spending.

Anyway, by "inputting pitched sequences" do you mean that you want to play notes in and have them recorded as a sequence, or are you talking about more typical sequencer usage?

So I'm a keys player, when I compose I choose a key and write chord progressions, etc. Whenever I watch videos of tutorials/performances on modular unit I can never find out how the aspects such as key signature/melodies and other such 'gestures' are inputted. Does that make sense?

I'm looking into MIDI to CV converters for playing a keyboard - but how would I sequence/'capture' what I play in? Or what are the other methods?

I hope this makes sense, I've just been unable to find out how so far. in the end, it sounds like you're looking for something more complex than just a typical CV/gate sequencer, something that has some "theory savvy" to it, either in the sequencer itself or via a quantizer setup that can deal with the chordal functions. I would suggest looking at modules along the lines of the Squarp Hermod, Orthogonal's ER-101/102 pair, ACL's Sinfonion, Winter Modular's Eloquencer, Five12's Vector, 1010 Music's Toolbox, The Harvestman's Argos Bleak, or a third-party build of the Ornament and Crimes. Also, pairing this with something along the lines of an external controller that can also sequence or handle chordal duties would be a good idea; check out the very useful Arturia Keystep, Kilpatrick's Carbon, Squarp's Pyramid, Conductive Labs' NDLR, or the Future Retro Zillion.

Building a small is definitely challenging but you can do a lot with it if you plan things carefully. You definitely want a balance of voices, modulations and control, so try to find modules that have multiple modes/uses, have built in VCAs or even filters.

I think you can ditch the Arp and Tune since the Hermod will cover those areas for you, so will Pam's Workout. You might want to add another voice source - maybe a 2hp VCO, Pluck or one of the Erica Synths Pico series voicing modules. In my opinion, the Expert Sleepers Disting Mk4 is an absolute essential in smaller systems providing you a plethora of tools that will come in handy including VCOs, filters, sample playback, the list goes on and on... If you don't mind digital VCOs, the Klavis Twin Waves might be a good oscillator that could help you add more voicing options to the system instead of Plaits. That will also free up a few hp that will help you fit other stuff in. Also take a look at the Mystic Circuits 0hp line. These are literally 0hp and highly usable for any size system and dirt cheap too!

Filters. I don't see any. That means whatever sound you come up with out of Plaits is what you get.
LFOs. No dedicated LFOs. Maybe the Hermod?
Traditional ADSRs. None. Hermod?
uBurst. Ditch this and get the Monsoon version. Same price, about the same footprint. More simultaneous modulation.
Braids. Get the micro version of this.
Ripples. Get the micro version as well.
Effects? You need effects.
VCAs. Get an Intellijel Quad VCA. I wouldn't go with less than four of them. They aren't just for volume control. They allow you to modulate and attenuate ANY synth signal.

Drop the Hermod and Pam's New Workout and get a 1010 Music Toolbox. You don't really have enough stuff to worry about sending multiple clocks around. The Toolbox might be easier for you to use and it offers gate, CV, as well as LFOs. You can use any gate output as a clock out.

Drop the arp module and get an Ornaments & Crime micro. You will get more use out of it but it's 8HP.

Ronin's got it...yeah, try and squish everything as much as you can if you intend to stay in this small a cab. You need to use both sizable modules that're jam-packed with functions like the Hermod or Toolbox, or try and shrink down your basics to as small as you can get while still keeping user interface functionality.