I downloaded the latest firmware update for the XBox 360 last night which included support for streaming Divx/Xvid movies, and it really is a nice update and worked really well.  I threw a couple test videos the box and they all worked well, and the ability to change the aspect ratio on the fly was a nice addition for people who have videos from different sources that have different aspect ratios. The only minor annoyance is the lack of support of Divx/Xvid files via the Media Center Extender interface.  The Xbox has two options for streaming video from a PC, one called Video which works with any PC running WMP 11 that has it set up to share video.  The second is the ability to use the XBox as a full Media Center Extender if you are running MCE on your home server; that works well for streaming live or recorded television (if you use it as a DVR), but the video library embedded in MCE won’t stream Divx movies to the XBox.    You can still get to your videos the first way, but you need to leave MCE on your XBox to do it.   Hopefully they’ll fix this in the future since MCE is a pretty good product and when connected with the XBox, it makes a great way to distribute video.