This post will be one of the most borderline i will ever post but it is important info so here goes.... (but i do not like todo it due to the piracy aspect the things it/i adresses)
Lets say you get a new game (or pirated it via a download)*shame on you!* and have it on the hdd and the path is set right then here is the explanation why you get the insert disc screen:
The xbe id (read about it more
HERE) most likly hasn´t been added to kai yet and there is
nothing XBMC can do about it.
So follow the above link and mail in if you have relevant information about the xbe.
I do not like it, but instead of 20 posts/week about games not working (becouse of warez copies out befor retail), you now have the answer WHY.
So do not bitch about games not working if it is a downloaded copy! Wait for store release and mail in the xbe id´s!