"This movie could not be played", and apps don't launch

Brand new iPod Touch
Windows XP
Both iTunes and the Touch have the latest software
Syncs successfully
Attempting to play a movie produces the error "The movie could not be played" on the iPod Touch. The movie plays successfully in iTunes on the PC.
Affected content includes:
"Juno" digital copy which was included with a DVD, launches in iTunes, enter a unique code to redeem.
"Stargate" free preview, downloaded directly from the iTunes store on the Touch
Additional symptom: no downloaded app will run on the iPod Touch (the "built-in" apps run fine) They appear to launch and then instantly disappear.
Affected content: "Facebook" and "Yahoo Messenger" apps
These problems occur whether the content is added through iTunes on the PC and then synced over, or downloaded directly to the Touch through the built-in store.
Because "free", non-DRM content (such as videos I've created from DVDs using Handbrake) works perfectly, I suspect an authorization problem.
Already tried:
syncing and re-syncing
multiple hard resets
de-authorizing and then re-authorizing the iTunes on the PC, and then re-syncing
Backup and restore
Anything I'm missing? Otherwise it's going back to Best Buy tomorrow.

Similar story here...
iPod Touch - 32GB v3.1.2 (7D11) - Model MC008LL
iTunes - 9.0.2 (25) - Intel 32-bit
Bought a 32GB iPod Touch yesterday and have been trying for hours to get two of my "digital copy" movies to work.
I have some other videos that I converted from MPEG-4 to H.264 and they play perfectly. I also suspect it may be a digital rights (DRM) related issue.
My apps, however, do work:
Skype (free)
Google Earth (free)
Globe Convert (free)
NASA (free)
I have tried resetting the device and restoring all settings with no success.
-Ed-

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