Updating xbox 360 codecs
If you did not get this update yet, but you do have Xbox Live, then before this guide is over you will most likely have updated your Media capabilities.
If you do not have Xbox Live or the media update then most hope of playing AVI files Files that have a .
Control the playback In the pop up window, hover over the video which you want to stream and click the Play icon.
I was then left with a folder called $System Update with a file inside.