Did some Googling and found
this:
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15. What types of AVI files are supported?
The Xbox 360 supports files encoded using MPEG-4 Part 2, Simple and Advanced Simple Profile. These files are often referred to as Xvid or DivX® video files.
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If XViD works then I guess I won't really need my original Xbox anymore, since all I use it for anymore is watching stuff on my HDTV using XBMC.