Windows 7 - Why must I sign in to Live! to play avi's and mkv's?

I have 2 xbox 360's on my network one in the living room for gaming and one in my bedroom for extending media centre. During the beta and RC phase builds of Windows 7 the 360 upstairs needed either a memory card or HDD and connecting to live in order to play avi's and mkv's (media update). I remember reading in a thread here this was due to the fact it was beta etc etc and that this would not be needed when rtm'ed well as you've probably guessed I still need to have HDD and connection to live, I wouldnt mind if it was just the HDD that was needed i.e to store the media update but why do I still have to sign in to live?? if anyone wiser than I could shed some light on this it would be appreciated.
thanks
settingsun

I've edited your title - grrr...angry does not tell a user what the thread is about, but will, in fact, probably deter users away from reading the thread, and quite possibly a user who may actually know a work around....

In RTM you no longer need a hard drive or memory card for 360 MCX to work. Several users have reported it and I tested it out with mine as well. Newer Arcade 360's never needed it as they have larger internal memory than the originals but I have an older original 360.

In terms of Live!, I did not test that but will when I get home. What exact build are you running?

Edit: I just reread your thread a little closer. Are you using Media Center Extender functionality or simple Media Sharing?

thanks for the replies. I'm using the extender function, the 360 in the bedroom is a 2006 model so this is probably the issue. When pressing play on a movie it will prompt me for a 'media update' and to sign in to do this however the media update is already on the HDD (about 2mb) I sign in it downloads nothing and starts to play. Oh and I'm using build 7600 rtm.