What formats are you adding to iTunes? I have tried several things and the only thing I ever got to work was pretty low quality H264.
My videos start as high-quality AVI files. iTunes won't natively handle AVI files, of course, so they must be transcoded.
For that, I've had great success with a free little utility from a company called Jodix. Do a google search. On my Core2Duo Vista notebook it can transcode an hour-long AVI video into the mpeg-4 format that iTunes uses in about 10 minutes on its highest-quality settings. At those settings, I can't tell a difference between the pre-and-post files. You can adjust the quality down if you don't need it (for viewing on an iPod, for instance).
Once converted, it's just a simple drag-and-drop of the .m4v file into iTunes and the videos play perfectly on an iPod, iPhone, or now, AppleTV.
