Plug your xbox 360 in to a router with internet access or alternatively use a wireless network if you are able using the instructions provided on the xbox 360.
It should update automatically to the latest version of software.
Currently the xbox 360 supports file formats of AVI, WMV, MPEG - 4 Part 2, H.264 and QuickTime movie formats. The file extensions included are as follows: .avi, .divx, .wmv, .mp4, .m4v, .mp4v, and .mov.
Make sure that the movie you want to play is on of these formats.
To check the format that the movie is in, just view its properties window.
There are many video converters out there that will allow you to change the format of a movie if it is no compatible. Simply go to download.com and search for "video converter" or "movie converter".
Hope this helps!
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