You're probably getting an error message (51-c00df236) saying you need to download an update in order for the video to play; an update that you’ve probably already downloaded. That's actually not the problem, although you will still need to download the update, which is called the "Optional Media Update."
Due to Microsoft’s annoying DRM (Digital Rights Management) practices, Microsoft only allows your videos to be played on Xbox 360 you originally set your Gamertag up on. In my case, I've been through 4 Xbox's in the past 5 years, and have had to move my account and licenses multiple times.
I ran into the probably today because I have 2 Xbox's still. One is connected to my Gamertag that has an Xbox Live account, the other is not. I was going to do some workouts I have in MP4 format via a flash drive upstairs on my Xbox 360 that is not connected to Xbox Live, and got the error message. The second I connected it to Xbox Live, it worked, but only when I recovered my Gamertag on that console.
Whether it’s a DivX codec, or Windows Media, the license is for the player, not the movies. You will have to transfer your “license” to your current Xbox. Just follow these Transferring Content Licenses instructions and you'll be good to go. WARNING: You can only transfer your license once every 12 months. So, if this is not your primary Xbox, don’t do it. If you've moved you're account within the past 12 months, or have another Xbox you need to watch movies on, continue on.
THE WORKAROUND! If you want to watch DRM content on a different Xbox 360 than the one with your Gamertag/Xbox Live account on it, or if you can't move your Content Licenses right now, then follow the steps below. You don't need a Gold account, you can just use a Silver Account, so don't go buy another membership for the following steps.
- Plug your Xbox up to the internet.
- Set up an email address or use an existing one not associated with a Gamertag, and then create a new profile on the Xbox.
- From your computer, sign in to your account at Xbox.com and add the Optional Media Update to your download queue. It should show up right away on in the active downloads.
- Once you've done that, this account will have it's own Digital Rights License, and will allow you to watch videos on this Xbox, even when it's not connected to the internet.