Recorded items, at least recorded TV, appears in the TV section. Yep inserted DVD's show up in movies but not really useful. I believe you can import to them to HDD but I bet that it won't be quick and DVD format is so bulky compared to divx
A really excellent extension that I would highly recommend for MCE is My Movies. It is free software and automatically catalogues your HDD movies with actors, trailers, plots etc etc. I have around 400 films and it catalogued them in 10 mins!
Here's the link
if you want to take a look. If you want more add-ons for MCE their are few sites, The Green Button is quite good just google it.