this could be because they refurbished your defective drive and sent it back to you. or it could also be that there was not yet an update available and it came later, in the future, and you downloaded it then.
i also had a bad experience with my first add-on. the power supply connector broke off inside of the drive, a case of poor workmanship. and i had to be supplied with a totally new drive.
as a result, despite being told exactly what you said (though it came from an xbox support rep), i had to reinstall with the original install cd i had kept from the first (hardware drivers) AND update via xbox live (firmware update) before i was able to watch my movies normally. i think it is a case of both being software and hardware related. and i suspect that if he plans to use it on a pc, even though it is not officially supported by microsoft in this manner, the best way to keep it updated is through xbox live...as it is the way that it has been endorsed to stay up to date with the releases.
HD DVD:16 Blu Ray:0
I took the RED pill.