Some gotchas with video in this release:
--It requires Windows Media Player 10 be installed on the machine.
--It only plays .wma and .wmv files.
--It requires the latest video drivers for most video cards. (For sure on ATI Radeon 9600/9700, which is what I have.)
--There is little documentation.
Here's a simple file you can put into XAMLPad to see it working:
<Grid xmlns="" >
   <MediaElement Name="myVideo" Source="C:\WINDOWS\system32\oobe\images\intro.wmv" Stretch="Fill" />