[basementjack]

Theres a device similar to the popcorn hour called a klegg media share. If you have a frys near you, they sometimes put them on sale for $130.

I have a klegg, and while not perfect, it is worth $130. It plays my xvid files perfectly, and youve never seen smoother fast forward/rewind - it's better than a dvd player. It also has the ability to open ISO's of your DVD's so if you want the best quality and want to preserve menus, alternate soundtracks etc.. that might be an option.

back end wise -the klegg requires windows file shareing - there is no streaming component. This has plusses and minuses.

the klegg has video, svideo, component video and DVI, which you can run to HDMI if needed.
Sound wise it's got optical and coax digital out, plus analog 5.1 out.

Anyhow thought I would pipe in with this additional option.
- Jack

ps - I should mention that quality wise, the klegg seems better at xvid playback than the Xbox 360 (at least when scaling the xvid to 720p is involved)
Klegg playback of DVD (iso files) is better than an average DVD player, but not as good as the scaler in the toshiba A3 HD-DVD player.