Ok I have a solution. I am not sure why this worked but it did.
1. Set up the media connect program. In my case it identifed the xbox 360 but the xbox couldn't find the pc.
2. Don't waste your time calling m$.
3. Download and install this program.
http://www.tversity.com/ I have no idea why this worked, but installed it and made one share(likely not neccessary). Then suddenly the xbox 360 can see the computer and all is good. I suspect it has something to do with upnp.
One note I have not been able to get this to work with a wireless PC. But after installing tversity the wired worked where it wouldnt before.
You can uninstall tversity after you've installed it. Things still work. Hope this helps people.
Next I am going to see if tversity can allow steaming of avi since it does allow it, even though xbox doesn't.
Dracus
Thanks a ton man! I have been trying to recognize my pc to no avial. I am on a network with my roomate. We share the router and he also has a pc and 360. For some reason when he decied to install the media connect program everytime i would try to connecton my 360 it would pick up his pc and not mine. Or then I coudnt find mine at all. It all worked fine until he installed on his end. Your fix with this worked and I can not believe it. Man I was so pissed. Thanks again