I am trying to stream videos from my windows 7 desktop to my Xbox 360. When I try to do it through windows media player it doesn't work. But when I use some third party software like tversity, my Xbox and pc can communicate perfectly. And I'm just wondering why does it only work through tversity and not wmp?

Did you enable Media Streaming under the Network and Sharing Center in the Control Panel?

It wasn't enabled but now it is and it still isn't working.
I've port forwarded too and added exceptions to my firewall

I assume you set the 360 to allowed within the “Stream” drop down under “More Streaming Options”? Originally the 360 could only stream WMV files. I'm not sure but you still may need to download the DivX streaming update from Xbox Live if you haven't done that already. Do you have File and Printer Sharing enabled? Are there any Windows services that may be disabled? (like UPnP or Windows Media Player Network Sharing Service). Give both systems another reboot just for fun? =D