I presume you've got Matroska MKV files? They'll have to be converted to VOB (using MKV2VOB) or streamed with TVersity.
Apparently MKV2VOB isnt the prefered application anymore. Try TsRemux and see if you have better sucess.
i'm presuming you fell foul of the same thing i did. Not adding the programme you're streaming it with to the windows firewall exception rules
when you enable media sharing in WMP 11 it doesnt do this by default, nor does it prompt you to. It tells you to in the instructions, but heh, instructions are for wimps !
Very much so, not to mention very long re-encode times!
.m2ts should work fine, from what I hear.