XMedia Recode is completely free and can convert ahead of time almost anything to a format playable on Xbox 360 without the need to transcode in real-time.
- Download and install recode
- Open the file you want to convert
- In the Format tab, select “Microsoft” in profiles, and “XBox 360 H.264” underneath
- In the Filters/Preview tab, make sure to select the right resolution for your TV, and the right audio track
- Click the “+ Add Job” button in the top tool bar
- Click the “Encode” button and you should end-up with a .mp4 playable by your Xbox 360