i'll have to dig deeper then. the thread on the first page just says that MCE should play w/e plays in windows and not much else. alot of talk of muxing and containers and so on. so far i've tried pretty much everything in that thread and failed to get these files playing on the xbox.
There are guides that tell you what codecs and how to install them to make MCE play everything, I think someone did on these forums in fact to. I believe you needed special codec packs that made MCE recognize the files.
alot of the guides on google i've found for setting up streaming for win7 and xbox is from win7 beta, and are obviously out of date.
special codec packs still doesn't solve my problem of MCE on the xbox taking forever to find my video library. maybe i'll start it up early today and just let it run all day.