Does anyone know how to add mv4 codec support to the playback engine, or am I going to have to transcode any mv4 files to avi files???
Do you mean .m4v files?
A simple google search returns numerous suggestions that xine should play these files, but that if you have trouble you could try renaming the file to .mp4.
Linuxmce uses xine-lib for video playback, all (almost) video playback functionality is provided by the xine library. All codecs that xine supports linuxmce supports. Xine is in constant development and Linuxmce is not always very up to date with current xine releases.