Yes, My Movies will work with almost any form of a movie. When you add a movie to your collection (within My Movies), preferably you point to a folder containing that movie. From that point, when it attempts to play the movie, My Movies will search the folder for recognized movie formats and play the one it thinks most appropriate.
This includes VIDEO_TS (DVD), ISO, DVR-MS and a host of other extension types. This choice is made at the time of playback, so the folder can be empty at the time you add it to your collection. ISO's played back are directed to a particular player (PDVD or TMT, AFAIK) that you register with it for playback of those ISO's.
If your chosen player is willing to play the ISO, My Movies is willing to do so.
There are opportunities for even more flexibility since the actual handling of the ISO is controlled by registry entries. I use that capability to remotely mount an image using iSCSI and have a player play that 'disk' when it appears locally. VCD is one of the default ISO handlers supported by My Movies.
AFAIK, there is still no way to playback blu-ray of any stripe completely within Media Center. There are a small variety of external players integrated into the MC interface that do so. My Movies supports those specifically, where possible.
There are also opportunities for third parties to access the APIs of My Movies and its database to do things outside those the developer is interested in supporting himself. In this vein, there is one outboard playback controller the allows playback of movies completely outside the MC environment. See the
Media Client thread in the My Movies Third Party Software forum. I have yet to use it.
My Movies is a very useful tool and it has a reasonably comprehensive database behind it and is well supported.
