I hooked up my XBOX 360 to my Media Centre PC over the weekend. Both machines are in the same room, but I wanted to see if it worked. First I had to install some software on the PC, then some on the XBOX. Then it moaned that my network (which still includes some co-axial cable) was a bit slow for high definition tv, but I said go ahead and connect anway. It seems to work fine - even though my wire is a bit on the slow side. Over christmas I think we will replace all the cabling and upgrade the Wireless Access Point to 802.11g. But that is all in the future.
The thing that impressed me was the seamlessness of the Media Centre experience. It just works. In fact, for some reason, the picture quality of the TV through the XBOX was actually considerably better than that from the PC itself - probably becuase I'm using a progressive scan connection from the XBOX rather than VGA from the PC. Using an XBOX 360 as a media centre extender is a very workable way of sending media round the house. In fact, when XBOX 360s get a bit more common I'm pretty sure that I'll be getting a core system for downstairs so I can do just that.