ExtremeTech shows you how to turn the Xbox 360 into a "media extender":
We're going to concentrate on the latter: sharing stuff from your computer(s). It functions as what's called a "media extender," a device connected to your home entertainment center that dishes up photos, music, and videos from a computer on the same network. It's remarkably easy to use whether your PC is running XP or Vista. In fact, it's the only current Vista-compatible media extender.
The 360 is a high-def capable piece of electronics, so even if the media on your PC is 720p or higher, you can stream it. If you take photos in high-res, for example, they can look fantastic on a high-def TV screen. High-def movies that you've downloaded or created on your own translate perfectly through the 360.