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[nybbleme]

All you need is the Optional Media thingy download from xbox live...it's free.
I had to redownload it after the dashboard update though, for some peculiar reason, but after that it should play mp4/mpeg4 file extensions.
What I'm wondering though is if it can play container formats like mkv if the video and audio within it are supported (ie xvid/divx/mpeg/mp4 and mp3/aac)