I have Divx avi movies that I use for my PS3 on the Pogoplug (used as media server). I don't transcode any of them. The only time I have transcoded in the past is when I tried to watch them on the ipod. I usually turn this feature off because it does take for ever. I know version 2.5.3 has broken some features of the media server and there are a lot waiting for 2.5.4 to fix a "corrupted data" problem.