By default the Zune software will not accept or transcode DiVX, XViD, and MPEG files with .AVI extensions. Zune Scene forum members have developed a couple ways to circumvent the problem, the simplest is a registry hack that will allow the videos to be added to the Zune software.
After importing this file to the registry DiVX files can be dragged and dropped into the software. The files can then be synced with the Zune device which will force the Zune software to transocode the files to the native .WMV format and allow them to be played on the Zune. The original forum post can be reviewed here.
SOURCE: Zune Scene
