Ever since I got my Xbox 360 last June, we’ve had the most fun while playing Lego Star Wars 2. And now there’s another way in which the 360 has been adding to our entertainment value by way of a free program published by TVersity.

The 360 has a feature in which it can stream video files from computers over the network, but this is limited to Windows Media Video files. Now, the beauty of TVersity is that it allows the 360 to stream any video files, such as AVI, XVID and DVIX (with the help of this tutorial). This has allowed us to watch a whole bunch of shows on our living room television that had been stuck on the computer.

In the past, I had tried hooking up my notebook directly to the TV, but it was a hassle to connect and reconnect the cables, and the audio was limited to the output coming from the headphone jack (the 360 has digital audio). And both of our computers are too far away from the living room to be connected permanently. I also thought about setting up a computer as a dedicated media server, but it always seemed like more work than it was worth. Now that I have been able to re-task the 360 to act as a streaming media server, it’s opened up a lot of media possibilities for both video and music.

There are still some limitations to TVersity’s solution, such as having to watch through an entire video before being able to fast forward and rewind. This could be solved by having some sort of pre-caching / pre-loading of video files on the computer side. But TVersity is still adding features and functionality, so I am sure that the software can only improve further.