H.264 - THE ANSWER

Question

Put simply, to get H.264 video to work on the iPod, it needs to be BASELINE profile, not MAIN. As other posts have pointed out, programs like Handbrake use the main profile. If you want to export to iPod compatible H.264 from Quicktime (or another program such as QT Amateur for batch processing), select export "Movie to MPEG-4". Then under the file format drop-down list, pick "MP4". In the video tab under video format drop-down list, pick "H.264". Set your desired data rate (768 kbps max. according to Apple), image size (I've actually gotten larger than 320x240 to work on the iPod for both MPEG-4 and H.264, but too large and you get frame dropping), and frame rate. The KEY THING here is to click the "video options button" and select "Baseline" and deselect "main" (not sure if you need to deselect it, but I did). Encoding mode is your call, obviously 2 pass takes longer. Don't forget to set the Audio tab settings to 128 kbps AAC. Also, I had streaming off, not sure if it matters.
Anyways, that's how I got this working. Sorry if someone else already posted this info, but I didn't see anything real obvious yet, so . . . hope this helps.

Answer 1

The file type ends up as mp4 following these directions. I noticed that episodes of Lost have file type m4v. What is the difference?
As far as I can tell there is no difference. The files created w/ quicktime using the ipod export setting gives a ,m4v file, while the files created with my above directions gives a file with a .mp4 extension. I've changed the extension on a working file and had it still work, it doesn't make a non-working file work.
Followed all your instructions and the iPod still says it will not accept that format.
I may have slightly mis-spoken earlier about support for higher resolutions. In MPEG4 and H.264, I have been able to get movies wider than 480 (MPEG) and 320 (H.264) pixels to work, but they were all in widescreen format, so the heights were smaller than spec. Basically, for H.264, 320x240 is 76800 pixels, I was able to get 384x200 (also 76800 pixels) to play on the iPod. Similar math for MPEG but max pixels being 480x480=230400.
So, if you encoded at a larger resolution, it might not work. I just tried 640x480 and it was a no-go.
Sorry for any confusion.