Here is the answer I got from tech support today:
The final shipping specs of the TakeTV supports MPEG-4 in DivX and xVid formats with a maximum resolution of 720x576 and maximum bit rate of 7Mbps.
There was a small number of early production boxes that listed MPEG, AVI, MPG on the boxes and in manual incorrectly giving impression that MP4 and H264 codec would be compatible. We have updated the packaging and manual.
I imagine there will be quite a few people who are surprised.
I did download quite a few of the videos from fanfare (free for a short time), but the website is excruciatingly slow.
I did go to www.stage6.com and found many, many suitable and compatible DivX video files (the HD ones of course will not play).
I also downloaded the DivX encoder from http://www.divx.com. It took several hours to transcode 90 minute MPEG-2 movie to a compatible DivX format for the TakeTV. This on a Core 2 uo PC running Vista; plenty of memory and free space; not sure why it is so slow, as my other transcodes to MPEG-4 are quite fast.
My LaCie Silverscreen ( accepts a lot more formats, and is essentially the same: USB drive + power supply + cables – yes, it is an actual HDD inside rather than flash like on the TakeTV. No longer offered int he US, but there is a new variation they offer in Europe, the silverscreen Media Drive.
Oh well, it would have been nice if the TakeTV was more flexible.
My Zune and iPod are small, portable, and have video out; even better is that they run from battery. Conversion time is a bit faster, too.