Do you have a external hard drive formatted in Fat32? That's the only way for PS3 to recognize the device. I bought a specially formatted one on Amazon for a hundred dollars because I wasn't about to ruin my external hard drive if I messed up somehow!

Otherwise, once you have that figured out, PS3 plays avi files splendidly. It doesn't register mp4 files; they won't even show up. I haven't tested any other file formats.

Let me know if you have any questions! I'd love to help if I can.

I'll be watching all these vid recs in the future. :)