Some aren't going to like what I say here but..
Firstly, I do not recommend buying a 360 used. Given the earlier xbox's had major reliability issues, your taking a chance.
You can get Xbox arcade now on sale for next to nothing. Here in Canada, 149 at wally mart. They can indeed to the media xtender thing just fine.
Next, the xbox or PS3 will not do ISO's. There are ways around this, just convert or extract the movie from the iso first
I have all 3 consoles, and use a HTPC as well. I really do not like the xbox for any media at all. Now, if your stuck on using Windows media center, then ok, go xbox. But if your wanting to play mp3's, pics and divx/xvid/mkv/vob etc, I prefer the PS3 or of course a PC. PS3 can take bluetooth keyboards/mouse, does have a browser for basic browsing, does have blu ray, and a blu ray remote for it is 20 bucks.What seperates the PS3 from the xbox for me are how it arranges mp3 and media as well as ease of use, the xbox is too limited and restricted to album/artist etc for songs and can be "picky" with almost anything. PS has a better picture viewer, and using tversity is seems to have less issues with a variety of divx/xvid type videos. Download tversity for free. PS3 also has buillt in wireless, although it sucks and has gigabit ethernet, and can copy content straight to it's hard drive from a pc...not to mention an easily upgradeable hard drive as you can use any sata PC laptop hard drive for it. If you go PS3, get the new slim model, quiet, small, etc.
xbmc for Windows, which turns your PC into a great media center, google it, also free, and if you can get a pc connected to a tv, any bluetooth keyboard and mouse will work fine. HDMI to a receiver or TV is easiest. XBMC will do anything, play anything,.. ANYTHING and is free. If you need a remote for this, grab a Playstation 3 blu ray remote at wally mart, then get a bluetooth transmitter, another ten bucks, and google PS3 remote for windows software...ask me later if you need links. Now you got a bluetooth remote that works through walls for less then forty bucks and controls anything in windows via keyboard shortcuts
That being said, I would still recommend Xbox over PS for games. The controller and live alone are worth it yet alone game library.
my two cents.