One word of warning: before you produce videos and attempt to play them back, you may want to check the specs of the files produced (frame rate, bitrate, resolution, etc.) using a tool like AVICodec (http://avicodec.duby.info) or gspot (http://www.headbands.com/gspot). There’s been quite a few topics by people who want to produce videos for playback on their recording devices like here , here, and here.
Also keep in mind Motion JPEG doesn’t have a standard! (See http://en.wikipedia.org/wiki/MJPEG) Different people may implement it differently, so only trial and error can tell you what works with what.
I had the same question, here’s what I found out. Your picture frame play’s .MPEG. You can convert standard .AVI into .MPEG with “Power Video Converter” http://www.apussoft.com/
It isent a free download but it dose have a free Trial Period. Works great for me. GOOD LUCK! Astranger