so your hulu hangs after you start to cache a video file and then you get something along the lines of aborted playback, too many dropped files or something like that.
the problem is in your xbox settings, specifically go to
Network Preferences
then
Event Server
go to "Continuous Repeat Delay (ms)" which is probably set at some unbelievably low number (mine was 25 ms). Crank this number up to something in the thousands (i have mine at 9825 or 9.825 seconds, which is probably way high, but hey)
Then go back and try to watch again.
I also found I had more success when i was watching in 480p (v. 720p)
I think the problem is that XBMC gets too impatient with the hulu connection and thinks the connection is dead (prematurely)
enjoy

So far so good. Last night I watched Survivor and Amazing Race without incident whereas it used to cut out after 20 minutes or so.
Thanks for the tip!
This solved my initial connection problems, and it seems that the streams are keeping up a little longer, but I am still freezing up after about 20 minutes. Any ideas? Thanks!
Jacked my settings way up to where yours are but movies on Netflix still never play. I either get nothing or the too many consecutive failed items. Argh!
II tried this, but I get the same errors as sti3, here is my log:
15:46:24 M: 26644480 WARNING: CUtil::GetMatchingSource... no matching source found for [Video plugins]
15:46:43 M: 23879680 ERROR: PICTURE::CreateAlbumThumbnailFromMemory: exception: memfile FileType: .mpg
15:46:43 M: 23875584 ERROR: PICTURE::CreateAlbumThumbnailFromMemory: exception: memfile FileType: .mpg
15:46:43 M: 23932928 ERROR: PICTURE::CreateAlbumThumbnailFromMemory: exception: memfile FileType: .mpg
15:46:44 M: 24588288 NOTICE: CMPlayer::CloseFile()
15:46:44 M: 24064000 NOTICE: CMPlayer::CloseFile()
15:46:46 M: 17600512 ERROR: CMPlayer::OpenFile http://192.168.1.102:63478/hulu-e5d24de5-5aff-4f52-af2c-f7e2c65396ef/1-h... failed with code 0
15:46:46 M: 17600512 NOTICE: CMPlayer::CloseFile()
15:46:46 M: 18030592 NOTICE: CMPlayer::CloseFile()
15:46:47 M: 23576576 ERROR: Playlist Player: skipping unplayable item: 0, path [http://192.168.1.102:63478/hulu-e5d24de5-5aff-4f52-af2c-f7e2c65396ef/1-hulu-e5d24de5-5aff-4f52-af2c-f7e2c65396ef.mpg]
15:46:47 M: 23052288 NOTICE: CMPlayer::CloseFile()
15:46:49 M: 24543232 NOTICE: CMPlayer::CloseFile()
15:46:49 M: 24023040 NOTICE: CMPlayer::CloseFile()
15:46:51 M: 17522688 ERROR: CMPlayer::OpenFile http://192.168.1.102:63478/hulu-e5d24de5-5aff-4f52-af2c-f7e2c65396ef/1-h... failed with code 0
15:46:51 M: 17522688 NOTICE: CMPlayer::CloseFile()
15:46:51 M: 17911808 NOTICE: CMPlayer::CloseFile()
15:46:52 M: 23633920 ERROR: Playlist Player: skipping unplayable item: 0, path [http://192.168.1.102:63478/hulu-e5d24de5-5aff-4f52-af2c-f7e2c65396ef/1-hulu-e5d24de5-5aff-4f52-af2c-f7e2c65396ef.mpg]
15:46:52 M: 23109632 NOTICE: CMPlayer::CloseFile()
15:46:53 M: 24633344 NOTICE: CMPlayer::CloseFile()
15:46:53 M: 24109056 NOTICE: CMPlayer::CloseFile()
15:46:55 M: 17756160 ERROR: CMPlayer::OpenFile http://192.168.1.102:63478/hulu-e5d24de5-5aff-4f52-af2c-f7e2c65396ef/1-h... failed with code 0
15:46:55 M: 17756160 NOTICE: CMPlayer::CloseFile()
15:46:55 M: 18145280 NOTICE: CMPlayer::CloseFile()
15:46:57 M: 23691264 ERROR: Playlist Player: skipping unplayable item: 0, path [http://192.168.1.102:63478/hulu-e5d24de5-5aff-4f52-af2c-f7e2c65396ef/1-hulu-e5d24de5-5aff-4f52-af2c-f7e2c65396ef.mpg]
Also i'm not sure what event server has to do with retry count for remote media?
Doesn't Continuous Repeat Delay handle how quickly the computer reacts to repeated keypresses? I don't see how that would fix the Hulu "Playlist playback aborted - Too many consecutive failed items" error.
A punt is a good play.