I got my 360 at launch, didn't get XP MCE until a month ago. I must say that it's very, very good.
XBMC is great in that it plays basically -anything- but I must say that I think it's been overhyped. It's a great media player, but I still preferred (yes I sold my Xbox1) to use Avalaunch as my dash and I made my own custom INI/XML file for Ava so that the top link was "Games", second was "XBMC", etc.
I rarely used XBMC and I rarely use MCE on my 360 but it's very, very nice.
Sure MCE doesn't support a lot of video formats for playback, but with Transcode 360 it does! So I've watched some 720P/1080i movies using Transcode 360 on my PC and MCE on my 360 and it works like a charm! Excellent HD movie playback along with DD5.1 or whatever the file may be coded with for audio.
However, I do have complaints....
The biggest complaint I have is if I go to "Best of Web" in MCE on my 360, so I can catch all kinds of games/videos/trailers from the net (like Comedy Central's "The Stash" which is GREAT) but that feature laggs like hell.
Also, a lot of features in MCE won't work if you are using the limited edition "mini" media remotes like that one I got with my 360 since I got it at launch. So this means I have to use a controller to do certain things!
All in all MCE is great and I'm glad as hell I transitioned from XP Pro SP2 to XP MCE 2005 Edition. It's just a shame I don't use it more often....
Oh yeah, as far as Transcode 360 goes, sure it will let me playback HD movies from my PC in formats like .ts, etc., BUT you can't FF or Rewind. I heard with the better media remotes you can use a 30-second skip button but, of course, I have the mini limited edition media remote so I don't have that button. Even if I did, a 30-second skip still isn't as good as a real FF/Rew. That's not a big deal though, so I can live with that.
I'm gonna research this VLC 360 the dude above mentioned and maybe that will stream HD .ts (and other format) files but actually allow me to FF/Rew, which again Transcode 360 doesn't do!
Anyone without XP MCE is really missing out. I recommend everyone go out and buy/download/whatever XP MCE for their PC to use the Extender on the 360 to the fullest potential like myself and other friends.