Converted Video will not play on the e250 only the audio.

I have a Sansa e250 with and extra 2gig card.  it is updated with the latest firm ware.  I purchased the Arcsofts Media converter 2.5 and tried to transferr a DVD to my e250.  the DVD was converted fine. it plays great on the PC in the e250 converted format. 

When i Play the e250 video file on the PC it plays fine.  But when i try and play the video on the e250 the audio is fine but the picture is just a few jaggered diagonial bars with black spaces between them.  the picture is un-watchable.

Does any one know how to fix this problem.  Arcsoft says it should just work???

Help please.