Just as a preface, I've searched like mad and my head is about to burst thinking about this process.
I have been ripping my dvd collection w/o shrinking to a single VOB using magic dvd ripper. End results has been roughly 6-7gb files. I then use vob2mpg to convert to mpeg2 file. I am running a Vista Ultimate box hardwired to my 360 over a 100mb lan. When I launch MCE on the 360 and go to browse my shared folders, I can see the mpg files, but the 360 locks up when trying to play them.
I have also tried to use Nero Recode to convert the files to a mp4 so I could use the dashboard video player to play these files. I chose Nero Digital AVC w/ 5.1 surround sound. That was a no go as well. The file wasn't even recognizable.

Any idea on a sure fire way to encode these files for a digital library that I can use on my 360? I don't care if the encode time is long, I have a pretty powerful pc (2.4 quad core/2gb 800mhz mem/several sata drives)and don't mind the time.

THANKS in advance!

As an experiment, I used handbrake the other day to convert a DVD to mp4 format. Played back fine on my Xbox, though I had to put it on a USB stick (Zune and WMP no worky). I doubt I will be ripping my whole library though. Anyway, it's free and works well from what I can tell.

I have the same problem with lockup nikemike

Keep the video within these restrictions...
http://blogs.msdn.com/xboxteam/archive/2007/11/30/december-2007-video-playback-faq.aspx
Handbrake works fine for DVDs on my iPod but what I'm more interested in is converting a 1080i/p ts video to 720p mp4. Something always seems to go wrong, unfortunately there is no one definitive guide to do this.

I know this is an old thread, but following the instructions in the link have others had success with that?

I'm getting an XBOX soon, but in the meantime I don't have a way of testing what I encode, so I want to make sure I'm not wasting time. Thx in advance.

Actually my buddy just informed me that Handbrake has an XBOX preset. I'm sure that works fine??

Guys, look into TMPGENC Express.

Actually my buddy just informed me that Handbrake has an XBOX preset. I'm sure that works fine??

It does, but you lose 5.1. I don't think the 360 supports 5.1 with H.264 (here's hoping they add it in), I think it does with Xvid/DivX though as well as WMV and MPG2 through the MCE UI.

I've used DVD shrink and vob2mpg for all my ripped movies and the 360 can't recognize them on my network or the external drive. IT appears the 360 is picky when it comes to video formats. I've used Handbrake in the past but it takes more time to process than I'm willing to spend.