I realized that the PSP refuses to play all my .MP4 files from the root VIDEO folder. If I move them to MP_ROOT/100ANV01 it will work but if I put them in the VIDEO folder PSP says that they are not compatible data. After investigating a little bit, it seems that it only refuses to play AVC encoded files all other are fine. Well, if fact only MPEG-4 320×240 files can be played from the video folder whereas AVC 480×272 is fine if I put them in MP_ROOT/100ANV01. Another interesting fact is that if I encode the files using Media Manager for PSP 2 instead of 3GP converter then I can play AVC files from the VIDEO folder.