"This movie cannot be played" error message on iPod Touch

Hoping someone can help. I have seen similar messages posted but no answers so I thought I would try with a new post.
I bought a Touch over the weekend. I successfully synched my music, contacts, photos and videos that I created in iMovie. Any application or TV show purchased through iTunes would not play.
I have restarted the Mac and the Touch several times. I de-authorised and re-authorised the account. I have restored the Touch 2x. Yes, I upgraded to 3.0 software but I have the 3.0 iPhone version on my iPhone and it works great.
I just finished taking off all applications, restoring the Touch to factory settings and setting it up under a new name. Yet - nothing!!!
Please - does anyone have any ideas? How can I downgrade back to an earlier version of the software?
Thank you,
Elizabeth

Hi Elizabeth,
Try converting the movies in iTunes as described here: http://support.apple.com/kb/HT1211
The article also provides a sample file that you can use to convert and sync to the iPhone/iPod touch.
-Jason

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