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I used the Zune software for streaming to my 360 long before I actually owned a Zune. Yes, Windows Media Player 11 will also handle the streaming, I didn't know that since the 360 pointed me to get the Zune software. However, nice thing about Zune is you can specify which 360 to allow sharing (just in case there are multiple 360's able to connect to your network) whereas WMP11 only allows open 360 sharing.
In any event, as Jason said, the 360 (and Zune device) only supports a few codecs, primarily WMV. If you do not have a Media Center edition of Windows (I don't) then you're out of luck with Encode360. I just use Windows Movie Maker (comes free with XP and Vista) to convert the files to WMV then stream to the 360. When downloading videos like trailers, etc. I always look for WMV versions first, and WMV-HD if it's available so I don't have to bother converting.
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