I do not have any experience with the xbox360. I can only speak for PC playback.
On the SWAP TAB, if you choose to disable the Microsoft Video decoder,
MP4 files will use my codecs instead of the windows codecs, on the PC.
I have no idea if this has anything to do with what the xbox360 will do.
Also for MKV playback on the PC, there is a checkbox to disable the MKV preview (needed only for the xbox360) on the MKV TAB. Using that checkbox will return MKV playback on the PC, back to using my codecs allowing subtitles and other H264 options to be used. Of course, unchecking that box will re-instate the MKV Preview software for the xbox360.
And as always, the suggested settings box at the bottom of the interface is recommended.