There's a project called XBoxMediaCenter (XBMC) which translates ur Xbox into a Media Center whic can play any Audio/Video/Image formats along with some other less supported formats like XboxDVD and Xbox HDD.
The software is open source and is under GPL that means it's FREE.
It can also play files from a PC over a LAN and even stream media streams from the internet.
You can also control the functions of the XBMC using GamePad or IR Remote bundled with Xbox.
Get more info about the project here:-
http://www.xboxmediacenter.com/info_project.htm
http://sourceforge.net/projects/xbmc/
Screenshots:-
This is browsing pictures in Xbox:-
http://xbmc.sourceforge.net/imgs/xbm...t_mayhem20.jpg
Browsing movie titles:-
http://xbmc.sourceforge.net/imgs/xbm...t_mayhem30.jpg