You bought the O2 because of what I wrote? Wow, you're an optimist.
The best remedy for APE errors is - convert them to FLAC. It's a much better format in almost all aspects (error stability, tagging, compatibility, etc), and it's really not that much bigger files than APE. Here's an excellent overview of lossless codecs: http://wiki.hydrogenaudio.org/index....mparison_Table
As far as your MPEG files go, they're probably MPEG2, not MPEG1. Cowons don't play MPEG2 for some reason (probably because of some silly DVD piracy lawsuits or such). You could try renaming them from .mpg to .ts - that may work (it works on the Cowon V5).
If in doubt, check your files with MediaInfo
and report back with the results.