Yeah, I did. Didn’t find that out till later, but it was also a problem with the power supply I was using didn’t provide enough current. Anyway, new powered usb hub and raspbmc rc2 and it works.
Tested a 1080p documentary I had and it worked well resolution 1920x1080 with a max bitrate of approx 16.5mbps, http://i.imgur.com/dv7lg.jpg
There were a few tiny jumps when I first played the video (almost like it was buffering), but after that works fine. I don’t have anything with a higher bitrate to test though
EDIT: That said, if you want a decent, small and cheap xbmc media center, get an apple tv. It has a case, remote, wifi and you can jailbreak+install xbmc. By the time you buy an sd card, a case and a remote or extra/wireless kb+mouse I think you’re better off with the atv.