I spotted this on channel 10 and had to try it out !
I've seen a similar visualization in the past, but it was either a paid one or I couldn't get it working, I can't really remember now.
Anyways this one is totally free and it works in both WMP and Media Center on Vista, yep that's right it also works in Media Center on your TV! It won't work on the extenders obviously but there is also a similar Yule Log effect for the XBOX 360 dashboard, however that is not free read more below, I've not tried the XBOX one out yet.
"Ah, just in time for the holidays! Sean Alexander has released an updated Yule Log Visualization for Windows Media Player. Originally released as a part of the Windows Media Bonus Pack for Windows XP, this visualization is simply a fireplace complete with crackling logs and dancing flames perfect for bringing a bit of holiday spirit to our PCs. "
Download the WMP / VMC Yule Log Viz here.
XBOX 360 Virtual Fireplace
"If you enjoyed the Windows Media Player Yule Log visualization but don’t have a PC in your living room, you may want to check out this virtual fireplace instead. As Major Nelson reports, an Xbox LIVE Member SniperED007 used the XNA tools to create this visualization “that has all the sights and sounds of a nice wintery fireplace.”