tadad, I am in a similar situation as Delania. Followed the instructions, get a 160*120 12 FPS file which on the Pod fades out after 12 sec (always 12 sec!!). I do not however get any error message - the audio just fades out and the video stops. This is infuriating!
I have installed k-lite, so I don't think that's the problem.
As mentioned in another post, the only video that works is one that came with the unit (160*120 @16fps). It can be found here:
http://rapidshare.com/files/9166575/original.amv
Actually it is a cute xmas video.
I have been wondering if my unit has not been hacked - the vendoe and disk utility say it's 2Gb, but I have heard of unit's hacked to report larger capacities than they actually have and this causes problems. How can I be sure without reformating?