T_TOBY  I have my library on an external drive (actually I have two) and they are both supported by VideoDrive. There must be an incompatibility with your setup I guess.  
(Version 1.6.8)

T_TOBY  I think this is stating the obvious: off course no tool in the world is able to play an unsupported video on the iPod or the iPhone without reconverting the video first. Unless a way to install additional codecs is found,like with AppleTV. In that case, VideoDrive does support this setup. I have an AppleTV capable of playing DIVX and after importing videos with VideoDrive they are streamed to my AppleTV without reconverting!  
(Version 1.6.8)

T_TOBY  I could not agree more! I love this little tool!

When you say you cannot move around your files, I noticed that I actually can. I moved around some movies (after importing them in iTunes with VideoDrive using the reference file option) and iTunes kept on playing them nicely.  
(Version 1.6.8)

T_TOBY  I use this tool regularly and like the new regular updates. Stability and features have been improving steadily. Too bad there still is nu automatic update function.  
(Version 1.6.8)