You still can update to NXE without internet.

Download the update file from MicroSoft, extract and burn the files into a CD/DVD, place it into Xbox 360 to perform update.

http://www.xbox.com/en-US/support/systemus...stemupdates.htm

They still give some love to Non-Live members, and of course, Jack Sparrows.

Yeah Pendrive should also work.

Nope, the movie codecs doesn't get updated as it seem. That's a huge disappointment, in fact many people complaint about it. I do not understand why they do not update perform a demanded update as such. Nonetheless, you can still use Tversity program to stream unsupported video to your Xbox 360.