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Unless you dont mind carrying around a 1 GB movie on a 1 GB SD card (yea I know the movie would have to be a little less than 1 GB) then you are going to have to sacrifice quality. A 256MB movie is going to have to give up a lot of quality to squeeze down to that size. Animated movies are a little different (can get good quality on the south park the movie in under 200mb). A 25min animated show like the Family Guy can get excellent quality in a 65mb file. A 1.5-2 hr movie like XXX or Top Gun is going to require 400+ mb to get good quality. Most of the time how you encode the movie with regards to the audio and video bitrate is going to make a difference. I use a video bitrate of 200 when encoding animated movies and a video bitrate of 300-400 when using regular movies (like those mentioned above). Obviously I cant cram too many on a 1GB SD card but I'll take 1 or 2 with me at any one time. (If you are wondering, a use an audio bitrate of 96).
Ive been "making" PPC movies manually for a while and have just started to play around with Pocket DVD Studio (they have a new version now that supports VGA devices). Allows you to crop the screen and a bunch of other neat features. The resulting file is an AVI file that I play back using Betaplayer (EXCELLENT program by the way).
There are a bunch of guides out there that will help you if you want to take the manual route of doing it...but be patient, experiment, and learn what is happening during the conversion process so that if you run into problems or have mistakes you will know how to fix them the next time.
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