Sean Alexander provides the details:
Visit Microsoft.com and download now by clicking here. Coming soon as an optional update via Windows Update.
The obvious question is, “What is Windows Media Connect and why do I care?”. Windows Media Connect 2.0 is a feature of Windows that enables other digital media receivers such as the Roku Soundbridge, D-Link MediaLounge or Xbox 360 to play streamed music, photos, and video* on plain old Windows XP. Xbox 360 you said? Yes.
And it works with services like Napster, MSN Music, FYE, and Yahoo Music in your Windows Media Player library. Whatever you say about DRM, the team is working hard to make sure this stuff will go around your house or on your devices as easily as possible given requirements.
Basically, Media Connect allows delivery of digital media from a “vanilla” Windows XP PC to other devices around the house that support the UPnP protocol. Version 2.0 provides speed improvements among other things.
As for “big picture” significance, the PC as a source of home media seems to be central to Microsoft’s future home vision and is one of the key sticking points in the Blu-ray vs. HD DVD controversy.