smokey-
First off, don't consider me an expert, I just had good luck following the instructions.
This is what I did so if you are different in procedure look to that for why you are having trouble:
Hardware-
I have a PS3 and an XBOX360 connected via ethernet (hardwire) to my router.
They both are capable to go on the internet.
I went into the settings section of the xbox360 and got connected and the first thing it said was here's a key code, I recall 2 - 4 digit numbers. And instructed me to go to my PC and enter the key when requested. I wrote it down and went to the media center PC and entered the code after trying to connect to the XBOX360. The xbox 360 was sensed by the PC but would not connect until the key was entered.
Once I did this I had the same problem but remembered to always reboot the computer when in doubt. After a reboot the xbox 360 would see all the shared folders by default. I then searched for additional shared folders I had set up manually and in a few seconds they popped up too.
Did you enter the code on the PC?
Did you make sure your xbox was connecting to the internet before trying to connect as an extender? ( this to be sure your LAN is functioning to the XBOX.)
On the XBOX, there is a main menu for videos. This is where I first checked and where I first saw my PC listed as a sub folder that I accessed and first saw the windows default shared folder show up. I had the 3 sample videos from Microsoft in there.
Hope some of my newbie observations can help you.
Captprice-
I am still having problem with some videos even with the Nero realtime conversion program which isn't as robust as they would have you believe, but, I'm still new at this so maybe it's just me. I have lots more to learn, such as the difference between container and file format. I'm pretty good with traditional video but this stuff is all new to me. They give error messages in XBOX and then the "no icon" after first attempt.