I have a 5th generation video ipod with 30 gig hardrive. My software is up to date per Apple's site.

No - I have never successfully played an MP4 file on my ipod.

And my settings on DVDfab platinum are:

Device: ipod - ipod.mpeg4
Video Format
Fixed Bitrate - 2330 kbps (default)
Frame Resolution - 720x540
No Split
Framerate: 29.97 fps
Audio Bitrate - 64 kbps
No Subpicture