I have gotten it to work for files stored on my network. I have a folder called "MediaServer" with all my files stored in it (sorted into audio, video, photos, and DVD rips). Media playback device is set to auto detect. "When to transcode" is set to "only when needed." Using these settings, I've watched a lot of VOB files taken from DVD's (a bunch of my daughter's videos are stored this way) and a few other video files.