The answer to why "no sound works at all under the more programs part of mce" is answered already by HiRoll3r.
QUOTE(HiRoll3r @ Jan 6 2006, 10:09 PM)
The "jerky video" is actually because when using the more programs option the 360 is just acting as a dumb terminal. The video is being shown on the MCE PC and the 360 is just displaying the same thing. Hence the jerky video and no sound."
Think of your Media Center PC as the server and the Xbox 360 as a client. When you start a 'More Programs' application through a client/Xbox 360, the client connects to the server and tells it to run the application. The Xbox 360 doesn't run anything and simply acts like a dual display of the server. This isn't very efficient, hence the choppy framerates. No sound because since the app is running on server, then sound is also outputted on the server.
So why does Online Spotlight have such smooth playback with sound? That's because it serves Windows Media Content (i.e. wmv, wma files). These files can be played natively on the Xbox 360. So instead of acting as a dual display, the Xbox 360 streams/downloads those files and decodes them on the fly. Now we get sound and smoother video playback.
This is why the current workaround divx playback is to use Windows Media Encoder. It serves the content in the same manner as Online Spotlight.