Best Video Format, Bitrate & Resolution for X-Fi2

I recently got my X-Fi2 and I want to watch videos at full quality on the screen at the lowest possible file size to maintain plenty of room for other stuff like music or more films, so before I start converting films, would anyone recommend the best conversion settings to do this (highest bitrate before you start to notice no quality difference, same goes for resolution)

So far I haven't even been able to get Creative's converter to work. It crashes whenever I attempt to convert a file. (So, those of you who wonder why on earth we'd even think of not using Creative's software, well... without mincing words: It's pretty much crap at this point.)
After some tinkering and a few initial crashes (grrrr.....) I've managed to get Creative Centrale to successfully rip the main movie file off several DVDs in what appears to be a nice quality .mpg2 format.
I use Format Factory (a free video conversion app) to convert these 5 to 6 GB files to a managable size for the Zen X-Fi2.
So far, the format that seems to play the best and smoothest is an AVI file with MPEG4 compression using the DivX codec. (I'm not very audio/visually literate, so I hope I'm explaining this correctly...) Basically an .avi file with MPEG4(DivX) encoding.
Though the Zen X-Fi2 has a widescreen, it seems to default any 640x480 or 320x240 files (with no internal widescreen/anamorphic tags) to the center of the screen - like 4:3 television on a 6:9 set. That basically means any widescreen files saved in this format may end up having black empty space all the way around on the top, bottom, left, AND right.
So, saving the above (widescreen) ripped DVD files to a 480x272 size works out really well. (Or 640x364 if you want a little higher resolution for when you connect your player to a TV.) This ensure the movie will fill the screen from left to right and leave black bars only at the top and bottom for those big, theatrical widescreen movies. (2.35: ratio or whatever...)
I also noticed that the file size difference from the lower to higher resolution is almost neglible. (Did this with my Lord of the Rings Extended Edition DVDs.)
The first time I converted The Fellowship of the Ring (Disc ), I used a video bitrate transfer of 52 KB/s. The size of the file was about 460 MB. It worked, but there was a fair amount of "pixelly" video and artifacting. I tried again using 024 KB/s for the video stream transfer and the video looks really, really nice. The final size was close to 890 MB and 640x364 resolution. I tried one more time at that same bitrate, but lowered the resolution way down to 400x228 and the size was of the new file was still 840 MB. So, the video bitrate transfer has a much heavier influence on the size and quality than the choice of resolution.
So, my personal recommendations for nice quality videos on your Zen X-Fi2:
.avi file, encoded as MPEG4(DivX)
640x364 (or even 480x272) -- only about 40 or 50 MB of difference in file size here)
024 video bitrate transfer (768 or even 52 if you don't mind some artifacting and blockiness and would rather have smaller files)
24 fps
28 KB/s audio bitrate (for nice sound)
2 audio channels
All this from a guy who's just figuring this out as he goes along...

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