I did a similar fight today. I used AVS Convertor and tried a whole slew of formats and also tested USB/SD and DVD-R medias. My tests are listed below, but the best format I've found was DivX 6 .avi format, 1500 kb video, 192 kb audio on a DVD-R. The results are on the left.
There is a cap on video bitrate like the manual says at 1000kb/s for the SD Card. This is NOT the case for the Data DVD-R. A regular dvd of up to 10.8 Mb/s can be played with the disc and the standard of 1500 kb/s works well with the DivX, but won't work with the SD. All the SD media at 640x480 was choppy (words didn'