I have used Windows Media Center as my DVR system for years now. With an inexpensive USB TV Tuner, I can get HD quality over the air channels for free and record them with my computer with no ongoing costs. The only issue I've had is that my computer's video card isn't quite able to keep up with presenting the HD videos on my large screen television plugged into the DVI port. I was reminded recently that my Xbox 360 can be used as a Windows Media Center extender, and it occurred to me that the Xbox video card would probably do a much superior job presenting my recorded shows and movies. But as I started to try to hook it up in my new house, I remembered why I hadn't done it before. My Xbox 360 does not have WiFi built in, and I'm unwilling to fork over the $60 for the adapter to add it. Since my router is in another room, I would have to run a network cable through two walls and over a vaulted ceiling to get the Xbox hard wired into the network.
But I had been studying networks for my second Bachelor's degree recently and started to wonder if I could just plug my computer directly into the Xbox using a crossover cable. I did some web searching and it appeared that it should be possible. It turns out that the Xbox has auto sensing capabilities so I ended up using a regular network cable. The only tricky part was getting the Xbox on the right subnet, but when I viewed the properties of the network adapter on my computer, I saw that the IP was 192.168.137.1 with a subnet mask of 255.255.255.0. So I manually configured the Xbox to have an IP of 192.168.137.2 with the same subnet mask and set 137.1 as the default gateway and primary dns server. After a few reboots and retries, the two machines saw each other and the Windows Media Center extender started working.
Now I can get full HD quality no problem and I even got internet connection sharing on the computer to allow the Xbox to connect to the internet for updates. I don't pay for Gold or really play online games at all, so I don't use the internet connection much.
After I got it working, my friend Josh gave me a WiFi game adapter, which would still have been nice to have so that my computer wouldn't have to be so close to my Xbox and TV. But when I hooked it up, there were significant bandwidth issues with the performance, and I haven't had time to figure out where the bottleneck is. My current setup is pretty nice, and I'm happy with it.