I was getting a grey screen with the sound in the background, the GUI would stay visible (i.e. The movie selection screen would not go away) and attempts to do anything else locked up the Pi.
After releasing that my movie backups using MakeMKV are merely containers for the original VOB files and therefore encoded in MPEG2, a quick and simple purchase of a licence key from the Pi people sorted things out.
It took about 2 hours for the key to come through and the easiest way to add this (at least for me), was to pop the card back into Windows and edit it there.
# Licences for MPEG2 and VC1
The Xbian script (under 0.8.3) got stuck in a loop as it would not accept 'n' when it came to entering the VC-1 key which I didn't buy so editing back in Windows was much quicker.
My entire MKV library now plays flawlessly on a 256MB Pi!