Heres my revised walkthrough:
1) Make sure your 360 is on.
2) Goto Start -> Run: Type in "services.msc" without quotes.
Find the service called "Windows Media Player Network Sharing Serivce", Right-Click on it and select Stop. Close the Window.
4) Double Click "My computer", Select Tools -> Folder Options.
5) In the Folder Options windows, select the "View" tab.
6) Select "Show hidden Files and folders", and UNcheck "Hide protected operating system files".
7) Hit Apply, Hit Ok.
Double-Click on your C drive. If you see a folder called DRM then goto step 7.
9) Double-Click the "Documents and Settings" folder, double-click the "All Users" folder.
*If you still cant find your DRM folder, Goto Start -> Run , Type in "regedit" without quotes. Expand "HKEY Local Machines" -> Expand "Microsoft" -> Expand "DRM". Double Click on the file in the right side of the window called "DataPath". In the new window called "Edit Binary Value" it should list the datapath to your drm folder along the rightside, itll look kind of scrambled. *
10) Double-Click the "DRM" folder, Click Edit -> Select All. Then Delete.
11) Select Tools -> Folder Options.
12) In the Folder Options windows, select the "View" tab.
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Select "Do not Show hidden Files and folders", and check "Hide protected operating system files". Select Apply, Select OK.
14) Goto Start -> Run: Type in "services.msc" without quotes.
15) Find the service called "Windows Media Player Network Sharing Serivce", Right-Click on it and select Start.
16) Go into Windows Media Player 11, and make sure your 360 is detected and "Allowed" to share.
17) Goto your 360, Select Music or Pictures, Select Computer, Select Yes, and hopefully your pc will now be found. If not, then your problem lies somewhere else. Sorry.