Updating xbox 360 video codecs
Start the installation process, and K-Lite will detect more codecs and filters on your system that it recommends you remove - do so and uninstall all the software it asks you (it will replace them with a set of codecs and filters that will be more compatible with WME).
You’re trying to play a video file on your XBox 360, but it won’t let you watch it unless you’re signed on to XBox Live. This all has to do with Microsoft’s annoying DRM (Digital Rights Management) practices. Obviously, a 4 year-old XBox is not under warrantee any longer. Let’s call my original XBox that I purchased 4 years ago “XBox A,” and my new XBox will be called “XBox B.” Each XBox has a unique “Console ID” number.
It still baffles me that the ability to play video files (.avi, .mp4, etc) directly from a USB device isn't a feature...
It's like it's been brushed under the carpet and ignored, yet this feature was so unbelievably easy to access and use on the Xbox 360!
So the general advice is to install WME, load a Div X/Xvi D file, try to encode it to WMV and if you get the "invalid or corrupt data was encountered" error, try the following steps involving K-Lite Mega Codec Pack.
If you haven't done so already, install Windows Media Player.