Thats exactly what i do. I burn it to DVD, and play it direct from the Xbox 360's drive. I have dowloaded tons of wmv-HD encodes, and i burn them all to disc, so i dont fill my HD. Its simple, i just burn to file with NERO, and it plays from the xbox drive, or the pc drive. (you burn it as a dvdrom, and the xbox360 reads the file)