What do i need to do to make my x box play divx/xvid movies.Do i need to chip it ?And when burning the film what setting do i choose on Nero (vcd...svcd...data...?)....

You need your xbox to be modified either with a chip, a softmod, or a TSOP flash. To play divx/xvid files you need Xbox Media Center (XBMC) installed on your xbox. Simply burn them as data onto a blank DVD and load them with XBMC.

Yeah, that is what you would need to do to be able to play those file types. After modding the xbox, you could create a folder on your xbox's hard drive (if you have the space to) and call it movies. Then transfer the movie file by ftp to your xbox into that folder and use XBMC to play it straight of the hard drive. Either way is fine.