May 2002 issue of Sound & Vision has a review of Xbox - check it out.
To quote from it -- "As a player of CDs and DVDs, the Xbox was very good. CD playback, in fact was quite respectable, with noise levels only about 3 to 4 dB higher than theoretical perfection. This is audibly noisier than many stand alone DVD players, but only under extremely critical conditions that the typical Xbox user is unlikely ever to encounter..." "...Playback of movie DVDs was also very good. In fact, the luminance response at the DVD resolution limit of 6.75 MHz was better than with many stand-alone DVD players...." "...Even difficult-to-get-right in-player letterboxing was fair instead of the far more common poor.
To use the Xbox as a DVD player, you need the DVD Movie Playback Kit for $35, and to get component video you need the High Definition AV Pack for $20. If you're buying the latter only to play DVDs, that's $55 combined. You can get a whole DVD player for around $100, which leaves the Xbox free for use in the kids' bedroom, or whatever.
Is the Xbox as a DVD player better than a $100 player? I have no idea.
As a DVD player, I don't find it to be that great. Picture is a little on the dark side (friends have commented on that, too, with their xbox). While watching K-PAX the other night, I found that the picture kept getting alternately darker and lighter, in something like 4-step increments, about every 90 seconds to 2 minutes. It was very distracting.
It's not as flexible as it could be: With ANY disc in (CD, DVD, or game), you can't access the dashboard! Duh! So, if you want to listen to some ripped music off the HD, you gotta walk up and eject whatever disc is in (there's no EJECT on the damn remote!). Also, there's no power on/off available from remote.
All in all, a stand-alone DVD player is going to give you more satisfaction as an HT component. It's convenient having the DVD playback, but I wouldn't want it to be my everyday player.
Oh, and just in case you didn't get the point earlier... THE FAN IS LOUD!
By the way, the Xbox ROCKS! I love it. I just think that they could've made it more flexible as a home theater component.
Now, to go off topic, for all the Microsoft Xbox hardware developers who read this forum
1. Having a separate DVD playback kit is fine, but once you plug in the receiver (that includes the region coding), you should be able to use the game controller as a "remote" (I mean, if the damn thing's already plugged in, why not use it).
2. Need a "Dashboard" button on the remote (and a wacky controller sequence) to access the dashboard even if a disc is in.
3. ... or at least, Eject available from the remote and game controller (yeah, with some wacky sequence, so you don't eject in the middle of a game - premature ejection ;-).
4. Power on/off from the remote (OK, I understand this is a harder problem, because the IR receiver is plugged into the USB port, which probably isn't even powered unless the power is on, but hey! You guys are geniuses! Figure it out!).
I don't know notice the XBOX's fan being loud. I have a stand alone DVD player and have used the XBOX to watch DVD movies and I never notice any fan noise from the XBOX. Unless you mute the sound I don't believe you can hear any fan noise. At least not on the XBOX i have.
I had the problem with the alternating dark and light picture. When I asked Microsoft technical about it, I learned that it was because I had the XBox connected to a VCR player. The alternating dark and light is copy protection.
I now run the XBox directly to my TV and it works very well.