Cheers for quick response guys...
I have changed Twonky settings so that it is set to PS3 and hey presto.... All working fine!!!!
No more converting!!!!! thank god!!! lol
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Im not sure what the issue is and was wondering if any one else has run into simular problems.... Basically if i copy my Xvid and mp4 files to a memory card the PS3 will play them off that as well as if i copy it to the PS3 itself... Twonky media will show these files on the PS3 but they are showing...