One of the first things I wanted to do when I hooked up my Xbox 360 last week was to check out the Media Center functionality. One of the big selling points for the system is that it acts as a Media Center extender, easily streaming your movies, music, and other media to your TV through the 360 (and if it's all in HD, even better).
I didn't have a Media Center OS PC on the home network I connected the 360 to, but that didn't stop me. Even if you have only an XP Home or Pro system, you can still use the Xbox 360 as a media extender. There's a clever (and free) app from Microsoft called Windows Media Connect 2. Previous versions of this software were, shall we say, not ready for prime time, but the current version 2 works great. You simply install the software on your XP Home or Pro PC, run it, then pick the media folders you want to share with your Xbox 360. Note that the Xbox and the PC need to be part of the same network, which basically means they're connected to the same router.
Unlike with Media Center systems, you can access only music and photos from the 360 using Media Connect, but if you don't have an MCE system, it's a good start and a painless way to get your MP3 collection pumping through the living room surround-sound system.