Technically, xvid videos encoded the right way should be playable on any DivX-supporting device. There are ways you can encode them that would make them incompatible though, which is why you’d often prefer the native xvid support.
I read recently that someone from Divx (the company) accidentally spilled the beans that the Xbox 360 would support DivX during some recent speech. He realized he had said something that was still NDA and backpedaled, but according to the account I read it sounded like it is pretty much a given that DivX support will be in the next update.
And yeah, what Jason and Fugitive said on xvid. The Xvid codec is GPL, there is absolutely no way either Sony or MS is going to put GPL code in their firmware since doing so would mean they have to then release all of the firmware source code under the GPL. But xvid is more or less just an open source implementation of divx (which itself is basically just a marketing usurping of the MPEG-4 branding), so the two are mostly interchangable.
Do you think Microsoft or Sony would put GPL code in the firmware?
Hint: The answer is no, not in a million trillion years.
I’m sure the DivX code they use will play most xvid content since, as mentioned various times, they are basically two implementations of the same standards, but neither company is going to put gpl code into their systems in a way that it can virally infect the crown jewels. Sony might support xvid under the Linux environment, but there’s not really a reason for them to do anything special there because it should already work.
From what I know of codecs (which is limited), most Xvid encodes are just a normal MPEG-4 ASP encoding - which is what the modern versions of DivX are as well. The PS3 announced that they’ll have DivX support in the future today, so I see no reason why that wouldn’t enable them to use Xvid as well.