Mkv ftw
You can either stream from a PC to the 360 with something like tversity Or convert them to avi or wmv and transfer them to the 360 to play them.
Encode360 used to be the way to go but it's been a while since I last had a look at it all tbh as I use an acer revo running xbmc hooked up to the tv for all my media needs now. I think the developer had to stop working on it and has a similar tool called EncodeHD instead now lol.
AVForums is usually good for all things AV
Xbox 360 Multimedia and Streaming Forum at AVForums.com
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