The stock video player is a bit choosey over which formats it will play. It doesn't like DIVX it doesn't like MKV. The video player is hidden inside the gallery and only shows thumbnails for the video format which it supports, in my case a disappointingly small number. I had visions of having to re-code all of my videos.
But not at all I installed MOBOPLAYER and QQPLAYER from the Android market and thankfully they work well DIVX and MKV work faultlessly.
A slight problem is that neither Moboplayer nor QQPlayer allow the user to select the MicroSD card as the media folder. They wont browse to the microsd card.
The work around is to use a File explorer (I use ASTRO file manager) to set up some short cuts and to navigate to the files.
Then tap the file, a drop down menu appears choose from the list of players and launch the file.