the best format to use is mp4 with h264 and aac audio. use xenonmkv to mux the files instead of convert as it doesnt loss video quality.http://xenonmkv.ev98.net
Nice find c01eman . That program works pretty slick. Too bad it doesn't accept 5.1 AAC MP4's though, so they can be 'one click' downmixed to 2 channel AAC. Kinda goofy considering the encoder/decoders that program has.
I would use PMS to play these MKV''s, as they actually do play with great sound. But the video has an annoying tick.....tick.......tick every 2 or 3 seconds.
The 360 has to be the most annoying, fussy and thoroughly frustrating console to work with when it comes to network video streaming. This suggestion helps ease that a little......thanks.