Looks like Microsoft has fixed the problem for the <1%

From Major Nelson

An updated version of the Fall Update is now available on Xbox Live which has eliminated issues relating to new or refurbished consoles failing after applying the Fall Update. Users who have already applied the Fall Update and are seeing an error message should call their local Xbox Support telephone number. If you already have the update, you will not be prompted for another update.

I tested out 1080P on our 56" DLP tv with the vga cord. Looks pretty damn awesome. Noticebly better than 1080i on the 65" right next to it. Sadly the 65" doesn' t have VGA. Instead it has DVI and you can' t do 1080p through component on it.
But everything still looks better on my 2 ms LCD monitor at its native 1280x720.

I checked out 1080p on a 23" monitor and couldn' t tell the difference between that and 720p. I' ll get a 1080p display when i find something suitable. I don' t want a CRT y' see and 1080p TV' s aren' t common here yet, everything seems to be about 720p LCD' s...

This is basically a cross-post from the " Defragging the xbox hard drive" thread, but the update seems to have fixed glitches when running videos from Marketplace.

And my Aracade games are just there now

well running the xbox 360 at 1280x720 (720p) on a monitor that is that exact resolution is going to look as good as it gets. ANy other resolution set form the xbox 360 or from the monitor is going to be distorted and not look as good. Even if it is a higher resolution. And it will typicaly look better scaled on the xbox 360 than the monitor or tv.

Native Resolution > xbox 360 upscaling > monitor/tv upscaling > both 360 and monitor/tv upscaling > xbox 360 downscaling > monitor/tv downscaling > both xbox 360 and monitor/tv downscaling

You also risk having delays when you scale if your monitor/tv have shitty scaling hardware/software.

So the only file type you can stream for movies are WMV? that kinda pisses me off. Most of my videos are other formats...