The XBox 360 is utterly infuriating. Hardware-wise it's a nice enough bit of kit, but the Microsoft lock-ins seriously limit what you can do with it. If it wasn't for the fact that I actually play a couple of games on it I'd have installed a linux distro on it months ago and used it as a media server, rendering engine and general TV based computer. Sadly, that would brick it as far as games are concerned.
Still, I've found a decent option for the media side of things: http://ushare.geexbox.org/
Ushare is a free, open source bit of software that lets you stream media from just about any machine to any other - it takes a tiny bit of editing on the config file, then voila, media streaming from linux to Xbox. I'm really impressed, it Just Works. So now I'm trawling through the BBC's iPlayer for old seasons of Doctor Who, films, comedy....it's great :)