After viewing post after post here for video format, I think have come up with a good method for encoding video that works perfectly on my Z150BH.  I have tried using a lot of different encoders but settled on Handbrake which seems to produce the best playback.  Here are the steps, I hope it saves someone else some time.

1. Open Handbrake and load the Source video (file, folder, etc).  Note the duration time.
2. Set the Destination file name
3. Container should be 'Mp4'
4. On the Picture tab set Size to 400x240, take the check box off Keep Aspect Ratio.  Anamorphic = none, Modulus = 16, Cropping = automatic
5. On the Video tab set Video Codec to 'MPEG-4 (FFmpeg), Framerate (FPS) to 'Same as source', Constant Framerate checked.   Avg Bitrate (kbps) - here you want to use a bitrate calculator to figure out how much bitrate to give Handbrake, keeping the file under 1000MB.   Using the duration of the movie, and the size of 1000MB, you can see how much kbps to give Handbrake on the Avg Bitrate field.  I use VideoCalc which does the job nicely but there are several online calculators.  Screen shot below...
6. On the Audio tab, be sure to set the Codec to 'AAC (ffmpeg)'.  skipping this step caused my files to not play at all.   The bitrate does not seem to matter but I used 128 as a standard.   On Mixdown I have tested with 'Stereo' and 'Dolby Pro Logic II' and both seems to work.
7. Save as a profile for easy access next time.

Bitrate calculator example:

Has anyone else tested these settings out?  Should this be stickied?