Microsoft is putting the finishing touches on its next firmware update for the Zune HD, v4.5. Many Zune owners have been eagerly holding out for extended codec support (incl. xvid) and SmartDJ which this firmware is said to include, not to mention the ability to access the Marketplace via the AV dock, too.

Engadget got the chance to preview both SmartDJ and Marketplace access via the AV dock just a short while ago and said they found the former being very smooth and easy-to-use, the latter being convenient except for having to input text using the simple remote and an on-screen keyboard.

You can watch the video below to see these features in action.

No definite date has been disclosed as to when the update will become available, it was just mentioned by marketing manager, Michael Yaeger that it would be within the next few weeks.