Can't find the option anywhere, the only thing I have seen is Album Art; I Would imagine if it can identify and find the album art online it can get the track names.
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If you use CD Text when burning your CDs, it might come up. The Xbox 360 can retrieve information from the Net, but with a mix CD, it can also get the information from the CD Text. Most popular burning programs include this option.
Album art displayed is taken from the internal album art embedded in the ID3 tag, though for some reason, it zooms in on it, cutting off the edges on all four sides.