Still sporting the same light blue color scheme as the classic Media Center Edition interface, the newer version has a slightly cleaner navigation system, with new icons and better submenus. For navigating menus while watching video content, instead of moving the video you're watching into a small picture-in-picture window in the corner of the screen, the new default is to overlay the menus directly over the content, with a subtle blue filter for readability.
Microsoft was demonstrating a live HD cable feed through a CableCARD interface in a Viiv-branded PC, as well as HD content captured via DVR. And, yes, the HD content will also stream to your Xbox 360 through the built-in Media Center extender in the game console. Both the live and recorded HD content looked much better than typical PC-based DVR recordings, but both had some minor artifacting. Still, Windows Vista and the first CableCARD PCs won't be available until much later in 2006, so this early demonstration leaves plenty of time for improvement.