If you talking about video that is downloaded, then you can set it all up through windows media center.. The xbox 360 is capable of playing divx, avi movies from your computer these days, and for downloaded movies that avi, you don't need to run windows media center, just need the update for the xbox and it comes up in the dashboard under videos.. Music can also be played over the xbox.
Also if you have cable hooked up to your computer, you can use your xbox to watch live tv. You can pause and rewind the live tv through the xbox, kind of like a tivo... ALso with cable hooked up to your computer, with windows media center you can set it to record whatever you want then watch it on your tv through your xbox.
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