I watched a couple of movies on my Xbox 360 this weekend. I noticed some motion artifacts that do not show up on my Sony DVD player. For example, the credits at the end of a movie seem to jerk slightly every second or so. I watched the credits with my Sony DVD player and I did not see any issues. My guess is that the Xbox 360 is taking an interlaced signal and converting it into progressive. This might work better if I had an HDTV, but I don’t.
I’ll try this again when I eventually get an HDTV, but until then I won’t be using my Xbox 360 for watching movies.