I looked at the file thru a hex editor and by just opening it in notepad. After opening in notepad I did a search and found entries for mpg, wmv, wma, avi, and vob. These are entries that you would find in the Media Player 9 codec. The avi entry would not be divx avi's but normal windows avi's.
So It seems very probable that this would contain the Windows Media Player codec as this xex file is the right size to host such a thing. Once we can break the encryption of the file it might be possible to add other codecs resulting in the playback of divx and xvid files. Also this is probably the reason "media connect" cannot playback video, as it's current form has no way to load the xex onto the xbox from a host pc. Maybe this is where M$ ran into a stalemate, and why videos can currently only be streamed from MCE2005. A normal MCExtender already contains the codecs hard coded.... but they wanted the 360 to be able to adapt for future use.
Remember this is just theoretical reteric...