I hadn't really watched a movie on it just used it to play games through till this evening when I came to watch Hot Fuzz I bought in the US. I finished playing Bioshock and popped the HD-DVD in the drive. it opened up got the lovely universal HD DVD logo and then BANG the dashboard popped up with an error COULD NOT PLAY CONTENT Error C667000A. First I thought it must be the disc or region encoding so I googled the error with not much luck. Then I came across the answer on this page.
http://www.xbox.com/en-US/hardware/x/xbox360hddvdplayer/download.htm
Basically there was a dashboard update for the HD DVD player in May 07 and this fixes the problem. The reason I had not recieved the update is that you have to start the HD DVD with no other disks in the XBOX drive so it doesn't switch to a game in my case Bioshock first. Once I removed the game, made sure i was connected to Xbox Live I pressed play on the HD DVD and the dashboard update popped up and downloaded...and Eureka the disk restarts and plays fine.
If you don't connect you XBOX to Live then you can download the update from the page above.