Ok after a long, long, long wait the 360 now plays Divx files. Let the let-down begin. This is the worst Divx support I have ever seen. It will only play Divx files made with newest codec versions. It will not play anything I have made with the original hacked Divx codec. Nothing I originally made with Vidomi (SBC) or Nandub. Basically about 80% of my library (which I just spent several days copying from CD to hard drive) will not play. And of those that do, some stutter so bad as to make them un-watchable. It seems to handle newer Xvid movies encoded with AutoGk ok. I'm guessing official Divx support is good but I haven't really tested that as I don't use that codec anymore. I'm sure we'll see a breakdown of support on the web soon.
Other info: The MP4 support seems unchanged (good but some issues with simple profile). I'm guessing mp4 5.1 is still not supported. Also there has been no attempt made to unify video support between the dashboard and the media center extender. MC Extender still cannot play divx or mp4, and dashboard cannot play mp2 or msdvr. This makes the 360 un-family friendly as a video solution.
After playing with Xbox Media Center (XBMC) for a week (a post about that coming soon) this is a real let down. XBMC plays every video file I have. I mean everything. Maybe MS will be pressured to fix this poor attempt at support, maybe they won't. Maybe I'm the only one who cares about original Divx support? Bottom line; don't throw away your transcoder yet.