What exactly is the problem?
Can you mount the USB-drives? Can you access them - enter a directory containing video files?
If so it might be a problem with your players. Maybe missing codecs, but that's just a wild guess.
I'm not sure now, but I think XIne don't play mpeg but Totem should.
Try mplayer from a terminal, you should get some error information (could also launch Totem in a terminal, should display errors).
Return with info and the error messages you get!