Q: What types of video file can the Xbox 360 play?

A: The most flexibility for Xbox 360 seems to come from using Microsoft's own WMV format, which enables playback of full 1080 videos with 5.1 surround sound with no restrictions on bit rate (from what I've found). It does also support other video formats which are detailed at the Xbox Support site but make sure you follow the other non-WMV formats exactly, because when I've deviated from these settings, I end up with files I can't play. The only other format to support surround sound is the AVI format using Dolby Digital.