I got up extra early today and hauled myself up to bestbuy to exchange the durn thing. The one I got this time came already charged(hot off the factory line?) and the first thing I did was test the video and video converter. Tested again after I installed the firmware, and tested a couple more times just to make sure. Yeah, it works.
I'll hold on to this thing and await the arrival of the next update and m3u support. If this update comes through, it will take this player from decent to the best on the market easily.