Just to clarify your question...
There are two "modes" of using the 360 to play back digital media:
1. As a media center extender, which connects to your media center PC and provides a remote user interface to the media center.
2. As a media player, which uses the XBox blades to list the videos it finds on a network share.
I take it that you are using it like scenario #2, and MPEG2 files are not showing up? Are those files in the same directory as the WMV files on the host computer? Does Windows Media Player 11 know about those files on the host computer? Are the mpeg2 files, or VOB files from a DVD rip?