Huzzah! I've discovered why XviD files didn't work in the PlayStation DivX Playback test. Apparently, streaming over Windows Media Player 11 does not work for any XviD files and most DivX files, but it does work fine if you load the files onto an external USB drive or burn it to a DVD. But there's a workaround, kind of.The best alternative to get "streaming" to work with Windows Media Player 11 is to first locate the file you want to watch over the network, then press the triangle button and copy it to your PS3. The same file that couldn't play back a minute ago will happily render itself when viewed off the PlayStation 3's hard drive.
It seems to us that the fault may either lie with the way that WMP11 streams files or the way that the PS3 plays back streamed files over the network—we're not sure. If the PS3 supported SMB networking, this problem might be eliminated. We'll have to check back in the future if and when they do add this feature.
Sorry for the confusion everybody! When I got DivX, and not XviD, to stream correctly, I assumed that XviD does not work. I should have tested it on an external drive as well. But hurray, XviD works fine on PS3. Thanks for checking up on us.
Update: I just did another test, and EyeConnect on Macs seem to stream DivX and XviD just fine for me. So it looks like a WMP11 problem. Has anyone else gotten it to support streaming w/ WMP11? TVersity seems to stream alright on PCs too, according to some users.
Update 2: Just re-confirmed that TVersity works for me, but the same files that work in TVersity don't work streaming over WMP11. Very strange.