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You could consider the open source xbmc.
It would do what you want, and in my opinion better than any other proprietary/oss/any solutions.
You could run it on the old xbox (which must be like ?15 from the highstreet now?!) with minimal frigging and no screwdrivers. Which is perfect for anything upto 720p xvids and upscaled dvds. The dated cpu struggles with most h264 content.
Or you could run exactly the same gui on a system of your choice and budget, on windows,linux,osx.
I tell friends to google aeoncentral (the xbmc skin I'm using) for a quick glimpse of what it does, and xbmc obviously if I know they'll appreciate reading and anything other than pretty pictures.
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