To have a video play in the widget, it must be an *.flv (flash video file). Here are some programs that we recommend for converting your video formats:

Mac:

http://www.techspansion.com/visualhub/ (Ultimate Video Converter, trial version only converts files up to two minutes in length)

http://www.heywatch.com (easy to use online service that encodes uploaded files, requires small fee for each video converted)

http://homepage.mac.com/major4/ (requires tech savvy to download and operate but is free to use)

PC:

http://www.any-video-converter.com/products/for_video_free/ (free service, great product, be sure to encode with at least 320x240 resolution)