Microsoft has released its latest update for the Xbox 360 HD DVD player including 1080p support (for the Elite), audio and other improvements.
Here a list of updates quoted verbatim from Major Nelson.
Added option for user to select from the following audio output formats via TOSLINK or HDMI:
Added “Dynamic Range Control” toggle for digital audio output
Improved HD DVD networking support
Improved HD DVD title compatibility
Improved performance with MPEG-4 AVC / H.264
1080p via HDMI is supported on the Xbox 360 Elite with HDCP compliant displays
Improved parental controls
The update prompt will come up the next time a HD DVD owner watches a movie and are signed onto Xbox Live.
The update is expected to be released later this week on Xbox.com for those who do not have access to Xbox Live.