Windows 7: Internet TV on XBOX 360

I have xbox 360 set up as an extender and there is no internet tv option, why? another question is when I play a video file on xbox through media center, why does there seem to be a huge drop in quality as opposed to when I play the same video file from the xbox dashboard. It's a real pain to copy video files to my shared folder so xbox can find them. Also, Why does media center recognize and play more video formats than the standard xbox video player?



It's a double edged sword, either I can't watch the video, or I can watch it with media center with terrible quality.