I use my 360 as a media center. My laptop runs vista so I use Vista Media Center but that actually has a lot of problems with certain file types.
However, I also have Orb installed on my other computer. It allows me to stream pretty much every single media file type to my 360 (as well as PSP, PDA, PS3, Wii, etc).
Another cool thing is that if you're running Orb on your computer at home and you're over a friends house or somewhere, you can stream your media anywhere.
www.orb.com
I really wouldn't count on the 360 getting linux to run on it anytime soon, so that's why I gave you that info, by the way.