As seen on the TVersity Development Blog:

WMV transcoding for the Xbox 360 is here.

Here is an early preview for the on the fly WMV transcoding feature for the 360. Since we have other stuff that needs to make it into the next release and since this is not yet ready we are releasing a patch. Please try it and let us know what you think.

I’ll give this a try later on today and post the results…