So, The server is built and I've had some time to figure out how to get the system doing what I bought it to do. I do development at home and needed a database server and development server for builds and a source repository. So, the plan was to build the box out with a 64 bit OS and virtualize three machines on top of it. This is, in fact, what I did, but soon found that I was pegging out the CPU on the Virtual server I had created for my media server. I'm using Microsoft's virtual server and I tried tweaking the resource setting to try and get more cycles to the media machine. Unfortuanately, the settings allowed me to specify only the percentage of a single CPU to allocate to any one virtual server. On my particular hardware, I have 2 quad-core CPU's which means that the most of total CPU I could assign to the media machine was 12.5% of the total resource.
I had wanted to keep the host OS pristine and clean, but I decided to install TVersity on the host OS and try it from there. To my delight, this worked perfectly. The transcoding used between 15% and 20% of the total CPU on the machine, which was just beyond what I was able to allocate to a virtual server. I was still experiencing some stutter while watching video on the Xbox, though, and I resoned that this was due to bandwidth on my wireless G network. I went into the transcoder settings in TVersity and reduced the video resolution from 1024 x 768 to 640 x 480 and the stutter has gone away. I plan to try raising this resolution a bit at a time to see where the wall is.