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The first guide in Rocco's post is the way to go. However, if you have a Q/Dash/320/607/2125/3125, you should select "Pocket PC" instead of "Smartphone", simply because the resolution for the "Smartphone" profile in PocketDivxEncoder is 220x178, whereas the "PPC" profile uses 320x240, which is the native resolution of those devices.
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