When I installed Windows MCE Edition I updated everything to what Windows Update offered. This included Windows Media Player 11. When I tried to run media centre it played nothing, not even TV. Luckily I blamed WMP11 before anything else.
I went in search of codecs.
I found one particular codec pack that did the job and allows me to play DVDs and everything in my video and music folders, even spotting dolby digital. This codec pack is The Cole2K Codec Pack. A simple installer takes all the thought out of doing it which makes it even better.
Other ones I found which I didn't use are:
K-Lite Codec Packs
Advanced Vista Codec Pack
So if you are having problems with video or music playback in Windows try one of these packages and it should ease all your worries.