So the consensus is simply that some Xvids work and some don't? I've got exactly the same problem - I received a GP2X with firmware 1.0.1 (the fuzzy interlaced one), and the movie included by gp2x.co.uk doesn't play (it says "LOADING, PLEASE WAIT" followed by "ERROR! NOT SUPPORTED FILE") and a DVD rip I did also failed after encoding it in various ways according to the guides linked from the Wiki. However, the Estonian (?) ice cream video from the file archive seems to play fine. All these videos also play on my Windows and Linux PCs, and identify the content as XviD. On the Linux machine I didn't even install any codecs, they just worked. As you can probably tell, I find video codecs in Windows pretty frustrating!
I was generally avoiding DivX because I've always been utterly confused by all the different versions of it, which ones are free, which are illegal, and which install spyware... However, DivX seems to work for me, while XviD does not.
The instructions I followed are on the Wiki here:
http://wiki.gp2x.org/wiki/Video_Encoding
though I had to use DVDFab Decrypter, as DVD Decrypter seems to have been taken offline by Macrovision.
The DVD rip worked fine for me, so DVDFab Decrypter seems good, and AutoGK seems a nice package too, not too confusing to use. As I said above though I can't get XviD to work, only DivX. I don't know which bit of the process is wrong there - it shells out to VirtualDub to perform the transcoding, and presumably runs one of the codecs I downloaded for part of the job. Maybe it's the wrong version of XviD, or something like that - I don't know whether or not there are actually different versions at this stage.
Shrug. I really need to mess about with smaller video files, it would be a lot easier to try new formats! If I do figure out what's going wrong, I'll see if I can update the Wiki. I'm half wondering if it's a firmware issue though, as presumably the video craigix is shipping did actually work for him at some point.
[big edit: updated after further testing]
