I guess the PSP is faulty, then. I formatted the memory card in the unit, then copied 'Bullitt' (1968).avi, and Chaplins 'The Great Dictator' (1940).mp4 to the VIDEO folder. (Not the ISO VIDEO one). When I attempt to play them, the PSP says '[?] Corrupt Data' for both titles which play OK when I attach the card reader to the PC.
A "funny" thing; there were 3 Ashford & Simpsons .mp3's (which are not on my PC) playable under MUSIC *after formatting the brand new card*!!
Can you beat this for irony and general strangeness?
Well, that's another £70 down the drain I suppose. I bought it on eBay UK and the time for reclamation has come and gone thx to my inertia. But I have the 3 Ashford & Simpsons songs to comfort me. They don't go all the way though...
But thank you for straigthening this matter out!