Note: The solution originally linked to by this page is no longer available.
One of the big gripes everyone has about using an Xbox 360 as an extender for Windows Media Center edition is lack of DivX support. If you can’t live without your DivX movies, one solution is to convert them to WMV, which makes them available as part of your compatible media library. Another solution is to use the Brains N Brawn hack to convert DivX files on the fly and stream them to your Xbox 360 using Media Center Extender
You need some basic understanding of Windows Media Encoder to make the hack work and there are a handful of installation files required, but if you follow the included directions, you’ll be streaming DivX movies to your Xbox 360. With any luck, someone will write a plug-in to do this more automagically in the near future. If you can find the right codecs, this could work for other incompatible formats as well.