Actually I got it working and thank yo so much for those recommendations as well. I used the CDXL tool kit GUI and it works sweetly. I started playing with the WinUAE configuration to try to match it as close as possible to real life original A500 upstairs and when I set it to CPU 68000 even if I used kick31.rom the program crashes.
But if I set the configuration like this on WinUAE:
Chip RAM: 512 KB (Match my Amiga 500)
Slow RAM: 512 KB (Match my Amiga 500)
Fast RAM: 8 MB (Match my Amiga 500)
CPU: 68030 (DOES NOT MATCH my Amiga 500 - My Amiga 500 is 68000)
Custom CHIP set: OCS (Match my Amiga 500)
Region: PAL (Match my Amiga 500)
Kickstart ROM: Kickstart 3.1 (DOES NOT MATCH my Amiga 500 - My Amiga 500 is kickstart 1.3)
Installed basic workbench 3.1 into, ran the CDGSXL GUI and placed the CDXL movie AND THE MOVIE ROARS LIKE A HORSE...SHE PLAYS sweetly..but it is an unfair judgement because I said in WinUAE RUN THE FASTEST as possible...so there is a potential it will be decently slow on a real life 68030 @ 40 Mhz verses WinUAE but it should be viewable I hope and playable when I set the FPS to 30 on the real Amiga.
But eventually it worked with those configuration. Now if I managed to get the GVP A530 with the fastest CPU possible it have, get an 8 MB of RAM and upgrade the HD with 10 GB or something...and it plays movie decently on my Amiga 500 then fellows I have managed to turn the Amiga 500 into a movie player. The ONLY BIGGEST OBSTACLE ever getting all modern movies from the internet to play on Amiga 500 is the conversion between PC movies into Amiga playable movies CDXL....that is the only obstacle.
The good news is...I got hired as a software development in a company....what I am going to do is I am going to take the money I make and hire a software program to work with me and make a windows application that converts any movie into CDXL playable for the Amiga with a simple click of a mouse, you let the program run on the background and she will DO everything. It may take a day for the program to work on the background who knows or 8 hours or whatever, but in the end the program will do everything in it's own, even as far as go as convert the movies 700 MB part into chunks of ISO image with in it's own bootup program. You burn the ISO image into a CD, insert the CD into an Amiga CD-ROM, boot..it plays the movies right away as if it is a DVD player, when the movie is finished from CD it quits back to workbench. You insert a new CD reboot the Amiga and bang it plays it automatically.