I have seen with the use of a P3 500 Media Center streaming HD WMV9 content to the 360 works flawless (this was a proof of concept test). This content will not play back on the actual BOX were the media resides but plays perfectly on the 360 via Media Center interface (MC Serves up content No processing). So my conclusion is that the 360 can def handle the HD WMV content without issue, and I bet its very accurate to say that "the decoder is there for H.264 and MPEG-4 AVC media.".
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I have seen with the use of a P3 500 Media Center streaming HD WMV9 content to the 360 works flawless (this was a proof of concept test). This content will not play back on the actual BOX were the media resides but plays perfectly on the 360 via Media Center interface (MC Serves up content No processing). So my conclusion is that the 360 can def handle the HD WMV content without issue, and I bet its very accurate to say that "the decoder is there for H.264 and MPEG-4 AVC media.".