viper, the problem is your bitrate. it needs to stay under 800kbps TOTAL (video+audio) or somewhere around there.
and the resolution must be under 480x480
or something like that
i just encode my videos 320x240 600kbps divx 5.02
NO PRO FEATURES
and they work fine.
if you want better bitrate control, you can try xvid
learn more about divx/xvid encoding at _www.doom9.org