Microsoft decided in it's infinite wisdom to NOT include a needed update in the new dashboard this fall (2008) which they had issued in fall 2007 to play media (.avi, ect) via Windows Media Player 11. You simply need to attempt to play an unsupported video or music file and the Xbox will prompt you to download the update- portable device, USB, burn to CD, however you can. I accomplished this quite by accident when I was ready to quit trying to connect a friend's 360 and admit defeat. It just made no sense. I had done everything the same as I had on my home network. I decided to plug in my phone via USB to attempt to play a music file to see if his Xbox was defective. That's when I got the prompt "update needed to play this file" (see fall 2007 Xbox update, which I already had for a year at home). Downloaded the update and WMP 11 immediately recognized his PC. Boggles the mind why Microsoft would not have incorporated this into the new dashboard update, but I stopped trying to figure them out long ago. Hope this helps you connect your computer to your Xbox360!