Its possible to use a software mod instead of a chip, all the information you need about it and chips can be found on Xbox-Scene, its the best xbox site have a look through the tutorials and FAQ's they should help. If you can solder then its a no brainer to install a chip, if not then there are solderless chips out there but last time i checked weren't that great.
XBMC, Xbox Media Center, is the program/dashboard that you will want to be using. It does everything you need including playing files across the network.
Streaming video from my pc is all i use my xbox for, chip it and come back with any software questions if you get stuck (Y)