Recently (actually, I don’t know how recently it was, considering I haven’t used my Xbox 360 as a media center extender in quite some time) the Xbox 360 began supporting file types other than Windows Media files (.WMV) on the Xbox 360. I tried connecting my Xbox 360 to my media center and wanted to play an .MPG file that I had on my computer from my video camera, and I got the following message:
Optional Media Update Required
A media update is required to play this content
From there, all I had to do was connect to Xbox Live and let the update download on its own. Now I can quickly and easily view any video that is sitting on my computers hard driver, whether it is an .AVI, .MPG, etc. I haven’t yet tried to stream any .MKV or DIVX files, but I’d love to hear if any of those file types have worked for you.