We cannot play HD Movies directly on Xbox 360. Here is a tutorial which will help you to play HD movies on your Xbox 360. Xbox 360 is an amazing gaming console, but once you get with this tutorial you can use it as your HD Movie player.
Here we go, below is the step by step procedure:
Step 1: You need a latest version of CCCP for this, which can be downloaded from HERE.
Step 2: Now you to download and install AC3Filter.
Step 3: Lastly you need one more tool namely GotSent Package.
Step 4: Once you have downloaded all these tools, make sure that you install them all. And later open the movie (that is saved in .mkv format) in a Windows Media Player or Medial Player Classic. BUT DO NOT USE VLC PLAYER.
Step 5: Now, right click on the red button labeled as FFV (shown in below figure) and click on the button labeled as AC3 Filter.
Step 6: This conversion must have surely altered the audio quality of the output file format. So, you can fix it by adjusting the AC3 Filter settings.
Step 7: Now, click on OK button and close the media player.
Step 8: Launch the GotSent Package that you have installed and choose the path of the .mkv format that you want to watch on your Xbox 360. But make sure that while splitting the video you choose it to be greater than 4GB otherwise the Xbox console will not play it.
Once you read this tutorial, even you can play your favorite HD movies on your Xbox 360. You might even find the tutorial to burn Xbox 360 discs useful.