Yes Tversity will work.
In fact the native streaming will work if you have assigned the Divx/Xvid download licence to the current xbox you are trying to use it on. The trick is to make sure you assign the licencing rights before you get banned if you want to use this option. (Assigning licence can only be done through xbox.com
Here)
The important thing to understand is that the "streaming additonal download" will be licenced to both the gamertag used to download it with and the original 360 you downloaded it on (important if you are using a HDD from an earlier 360 you owned). In short when online with the Gamertag it is licenced to it will always work, but not if you are offline. For it to work offline it must be licenced to the current console you are using, hence the link for licence transfer above.
Hope this helps.
Unsivil, I've experienced similar symptons to those you have listed for either one of two reasons;
1) network interference - are you getting enough bandwidth over the network? If my microwave is turned on for instance it interferes with my wireless connection killing the throughput which causes streamed media to chuck up as you explained.
2) PC HD read access/speed. If you have other apps running on the PC (including background apps or virus/spyware etc) they can interfere with the HD read spead on the PC, which then flows through to the xbox end. I've also seen an about to be faulty HD do something similar as well.
Without more detail can't really help more than that. Hopefully it helps put you in the right direction.
This post has been edited by Bearhug: Nov 6 2009, 07:06 AM