For viewing avi try TCPMP a free media player which alot of people here swear by.
http://tcpmp.corecodec.org/download
ive just bought DVD to Pocket software to compress dvds and convert them to pocket pc format. it took about an hour to convert it but it was less than 200mb for a 1.5 hour film.
www.makayama.com/dvdtopocketpc.html