I tried Connect360, an didn't like it. I told it to stream my iTunes movies and TV shows, and everything showed up in one long, alphabetical list. It was a mess.
I use a Playback by Yazsoft. With it, I added my Movies and TV Shows folders within the iTunes folder, and it shows everything properly sorted by TV show, season, and Disk-Track number. Much, much better than Connect360.
(Don't know about transcoding, as all of my videos are in an iTunes/iPhone/iPod-friendly format. The 360 plays them just fine. Just be aware, anything with DRM will not play.)