Hello, i have looked around here and found people with similar problems, but the solutions ive found havnt helped, so here goes.

Yesterday, after a long time deciding between an Xbox 360 and a mac mini with Plex, i decided to get the 360 solely to be a media extender on my home theater setup, to play my ripped DVDs through the WMC interface. Macs Plex has a much more slick UI but the cost of the mac mini was too much, plus i'd need a new AV receiver with HDMI...and the component video looks good anyway.

I initially set it up at work, on our network there so it would get the new updates, so yes it has been updated to the new (and very Wii-ish) GUI. After a little work figuring it out, we set it up to connect thru my friends Windows 7 PC and media center worked great, and i also got the update to play Divx files while i was at it.

When i got home, this is where the problem is. I do not have internet, as i live out in the middle of nowhere haha. Well...I do...but it is in the form of a Verizon USB modem, connected to my desktop PC, with a 5GB monthly cap, so leaving it connected 24/7/365 is out of the question...as is even being able to get on xbox live with it anyway.

I connected the 360 to my home network, and it sees my computer. I can view some files thru the PC connect options, but when i try using MC is where i have an issue. It will begin the setup, give me the 8 digit code, but when i put that code in my computer, it will stop at the 2nd step, finding the extender or something like that.

Then, the Xbox will look like it is going thru, but it goes back out to the dashboard and an error pops up saying "this game needs to be connected to xbox live..."

I find this odd that not only 1) um...its not a game lol, and 2) why does my 360 even need to go online to pull movies off my computer lol.

I did hours of searching last night and have found a lot of people having this problem, and it seems most are having it with the same OS im using...Windows 7 build 7100 (this is the same exact os that was on my friends computer when we set it up also). Unfortunately the few suggestions i saw didnt help.

People said the setup works perfect with Vista, and does not try to connect to live...and some people even said they have gotten it to work with 7, but never said what version they have or if it is 7100, what they did to fix it...a patch maybe? or a regedit change?

I do not want to buy Vista because i hate it, its a lot of money, and would be a waste with 7 going official most likely within the next 6 months. Does anyone know of a way around this issue as it is very fustrating.

If there is no way around this then it will be a total deal breaker and I will just take it back and pick up a mac mini and go the plex route.

Thanks for any help i can get!

I think its trying to update the codecs on your xbox 360 hdd. Are the files Divix or Avi ?

If you can see files through the normal interface can you play them from there? If so then do you really need to use Media Center?

The only times that I had problems with 360+MC not connecting properly was due to my firewall, specifically ESET Smart Security. This notoriously causes problems when trying to share/connect with a 360. Try disabling your firewall and see if that helps.

I'm running build 7100 myself so I'll try to make an MC connection and report back later.

Have you tried tversity, i find it fulfills 99% of my needs & plays flawlessly to my xbox360 (my main media centre).