byronm Microsoft spell it out themselves look at the post above or at
question 10 on this link
The Xbox 360 is not an open platform and not like a computer were you install a codec and get playback support, codecs can be implemented to work in one instance and not in another inside a closed environment. The Xbox does indeed decode the videos locally when running in extender mode so the only reason the support is not there that I can think of is;
- Microsoft left it out intentionally to sell v2 extenders
- Licensing issues/internal politics of Microsoft
- Microsoft ceremonial shotgun takes aim at every product and must sabotage it in some fashion
The MPEG licensing authority deems the extender a seperate player from the xbox dashboard, just because it is licensed for one does not mean it is licensed for the other hence why there "could" be complications.
I can only pray that they see sense and add XviD/H.264 support to media centre extender in the future, the optimist in me hopes that they are just stalling until v2 extenders are on the market to enable the functionality so it's back to the waiting game again sigh....