I've finally nailed this!! it has been a royal pain in the ass though 
To cut a long story short, The Xbox360 can only support no more than FIVE reference frames ( I have absolutly no idea what a reference frame is!).
The Blu Ray Ripper default profile: "MKV.h264.ac3" is using the "x264_ABR_Fast.preset" which I believe is set to 16? reference frames.
There are other presets available which can be linked to each .xml profile but for some reason, when I create a custom profile it does not show up in DVDFAB for me to use so I have had to edit the default profile in notepad to point to a different preset:
1) opened up "bd_mkv.h264.ac3.xml" located in the profiles3 directory
2) browse to line: 31
3) edit the perset key to: <perset enable="0" key="x264_PS3_Xbox360_Fast.preset" owner="" template=""/>
4) save it.
The "x264_PS3_Xbox360_Fast.preset" has a level 3 setting on reference frames which allows the video to show.
All you need to install on your computer is:
1) Windows 7 OS
2) DivX 8 codec pack (makes use of the media splitter in windows 7 for native playback without transcoding)
3) ACfilter (to allow 5.1 or 7.1 playback...this may allow DTS to work but I have never used it)
thats it!
You'll have to play about with the video bitrate setting when using the ripper program, I have found values higher than 8000 can cause stutter when playing on the xbox 360.
Hope that helps someone!

To cut a long story short, The Xbox360 can only support no more than FIVE reference frames ( I have absolutly no idea what a reference frame is!).
The Blu Ray Ripper default profile: "MKV.h264.ac3" is using the "x264_ABR_Fast.preset" which I believe is set to 16? reference frames.
There are other presets available which can be linked to each .xml profile but for some reason, when I create a custom profile it does not show up in DVDFAB for me to use so I have had to edit the default profile in notepad to point to a different preset:
1) opened up "bd_mkv.h264.ac3.xml" located in the profiles3 directory
2) browse to line: 31
3) edit the perset key to: <perset enable="0" key="x264_PS3_Xbox360_Fast.preset" owner="" template=""/>
4) save it.
The "x264_PS3_Xbox360_Fast.preset" has a level 3 setting on reference frames which allows the video to show.
All you need to install on your computer is:
1) Windows 7 OS
2) DivX 8 codec pack (makes use of the media splitter in windows 7 for native playback without transcoding)
3) ACfilter (to allow 5.1 or 7.1 playback...this may allow DTS to work but I have never used it)
thats it!
You'll have to play about with the video bitrate setting when using the ripper program, I have found values higher than 8000 can cause stutter when playing on the xbox 360.
Hope that helps someone!
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