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I stream everything to my 360 from a 1TB harddrive. So basically, 1TB hard drive connected to PC, over ethernet to router. Then router to 360. Finds all my music, movies and pics off the 1TB hard drive. Streams the lot! Excellent.
360 can also play off memory sticks etc!
edit: I can always see all movies etc on 360! So thats about 400 movies, 800 albums etc! woot!