Note: This process was contributed by a community member and we have no reason to believe it doesn't work if followed to the letter.
I prefer Shark007, but others may work with some tweaking. Use Shark's recommended settings on both 32-bit and 64-bit CODECs, and says yes to the Live TV, Xbox 360 question. However, first, a little background: it’s a little known fact that Microsoft has released a new version of the Optional Media Update that will play MKVs and other media files natively.
In addition under MKV, I choose to use Alternative Extender support. If you have not already done so install Media Browser Classic on your Windows Media Center machine and make sure it launches. Launch the Media Browser Classic Configuration program, and go to the extender iso tab. Originally Microsoft has had several versions of this program, but not all of them will play MKVs.
It was a mystery for a while to me, and the behavior was hard to track down.
I’ve read countless forums, some even suggesting that this simply won’t work. Through many efforts I discovered how to get this to work fairly easily, as long as you know what you need to do, and the exact steps to do it!
The interface is unmatched to anything else that is out there. You’ll of course want to have Media Browser 3 installed on a server already.