This is a tricky process. I had a little trouble getting mine properly running so I thought I would mention the gotchas that I found. I was totally confounded because I had my XBOX 360 working fine with the Windows Media Connect stuff, but getting the Extender functionality to work was rather fruitless at first.
- Set up your Media Center Edition Windows machine on a drive that is not a "dynamic drive". Media Center Extenders will not currently extend media that is on Dynamic Disks. This can be troublesome and in my case required me to performa reinstall.
- Pay attention to your firewall, it might be blocking the ports that are needed for doing the extender operations.
- If you get into your Media Center Extender (it connects to your Media Center Edition Windows PC) but you can not access your media (photos, music, movies), then you probably have not yet run the Media Center Extender Manager (Start -> All Programs -> Accessories -> Media Center -> Media Center Extender Manager). Once you are in there, select your XBOX, go to file->settings, then run the wizard. That should get you going!
Hope this helps, I wonder how many other people have had the same problem. Tough to get going, but totally worth it!