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Here's an additional guide to allow MP4 video files to stream, not just divx/xvid/wmv:

XBox360, Vista Media Player 11, MP4 video streaming
Getting MP4 video file streaming to work to the xbox in Windows Vista with Media Player 11 is quite a challenge.

Some Codec Packs will enable this, but I want to know exactly how to get it working and I don't like using packs. Also they don't do everything right. The Vista Codec Pack for example allows streaming of mp4 to the Xbox360, but does not enable playback in WMP11.

Anyway, here's how I got MP4 files working in Vista WMP11 and the Xbox 360:

0. Make a restore point so you can revert all the changes. If you make a lot of registry changes, take a registry backup of the relevant nodes.
1. Install FFDShow. I used the latest version 20070805. Allow use for all apps to enable explorer thumbnails.
2. Configure FFDShow: I like to disable the trayicons.
3. Install Haali Media Splitter (latest as of 20070807)
4. Configure Haali: Autoload VSFilter=yes, Show tray icon=no, Enable thumbnails Extraction=yes
5. Run custom registry file to:
- enable WMP to identify mp4 and m4v files as video files
- enable WMP to stream mp4 and m4v files
(be careful when changing the registry!)

-------------MP4_to_WMP.reg-------------------------
Windows Registry Editor Version 5.00

; Parts are set, but type already exists
[HKEY_CLASSES_ROOT\.mp4]
@="mp4_auto_file"
;"QuickTime.bak"="VLC.mp4"
;"Content Type"="video/mp4"
"PerceivedType"="video"

[HKEY_CLASSES_ROOT\.mp4\ShellEx]

[HKEY_CLASSES_ROOT\.mp4\ShellEx\{BB2E617C-0920-11D1-9A0B-00C04FC2D6C1}]
@="{c5a40261-cd64-4ccf-84cb-c394da41d590}"

; WMPlayer extension
[HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Multimedia\WMPlayer\Extensions\.mp4]
"PerceivedType"="video"
"Permissions"=dword:0000000f
"Runtime"=dword:00000007
"UserApprovedOwning"="yes"

; WMP MLS Extension
; This is very important for WMP to identify mp4 files as video files
[HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\MediaPlayer\MLS]

[HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\MediaPlayer\MLS\Extensions]
"mp4"="video"

; M4V --------------
[HKEY_CLASSES_ROOT\.m4v]
@="mp4_auto_file"
"PerceivedType"="video"
;"Content Type"="video/x-m4v"
"Content Type"="video/mp4"

[HKEY_CLASSES_ROOT\.m4v\ShellEx]

[HKEY_CLASSES_ROOT\.m4v\ShellEx\{BB2E617C-0920-11D1-9A0B-00C04FC2D6C1}]
@="{c5a40261-cd64-4ccf-84cb-c394da41d590}"

; WMPlayer extension
[HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Multimedia\WMPlayer\Extensions\.m4v]
"PerceivedType"="video"
"Permissions"=dword:0000000f
"Runtime"=dword:00000007
"UserApprovedOwning"="yes"

; WMP MLS Extension

[HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\MediaPlayer\MLS\Extensions]
"m4v"="video"
-----------------------------------------------------------

The end result for all this:
I can view and play mp4 files in Windows Media Player. With thumbnails.
I can stream mp4 files to XBox360
Explorer shows mp4 thumbnails
Notes:
It would appear the mp4 (m4v) files have to be defined as video/mp4 in the HKCR/.xxx setting to make streaming to xbox360 work
m4v works too by changing the mime-type from video/x-m4v to video/mp4 in HKCR/.m4v
Installing VLC will reset some settings (thumbnails may break, streaming of m4v may break). You will likely have to reinstall Haali and check the mime-types to fix the situation.
I transcode my video files to be iTunes/iPod compatible with Videora iPod Converter. They will thus work in iTunes, iPod, WMP11 and Xbox360
Some converted mp4 files will be rejected by iTunes due to faulty mp4-tags. The files can be fixed with Tagger. Just open the mp4 file with tagger and save it. (Update: This was a problem with ReadyBoost. Since I disabled ReadyBoost I have had no problems with importing mp4 files.)
Xbox360 will only display the mp4 video files through the dashboard (Video playback). The Xbox Media Center Extender will not play them (they will show up though).

Taken from:
http://owlet.spaces.live.com/Blog/cns!D48B90C1DDF5D401!297.entry?wa=wsignin1.0