If I was to plug an external HDD into the USB port of the 360 would it be able to play Hi Def video files from it smoothly? The HDD I'm looking at is 7200 speed and 250GB in size.
Yeah, you need Windows Media Center to my knowledge. However I've heard they're making some software for non WMC users, can't be certain about that though.
I personally have no in-depth experience with these programs, as I have a XBMC Xbox and would never use my 360 to play Videos. Also I have a WMC PC, so wouldn't need to even if I wanted to use my 360.
However I believe that Transcode 360 is currently the most advanced and supports the most formats.
And yes, these programs all stream the data over Ethernet and it is 99.9% certain that there will never be official support of video playing from direct storage sources.
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