Use the free program "Super" to convert DivX to avi.
Of course you'll need a PC to do this, don't expect to do it on the ONEt.
(It's not much of a stretch like some other video conversions, because DivX is a particular extension of avi)
It shouldn't have escaped your notice that in the manufacturer's own words "The Ingenic Jz4730 is a multimedia application processor targeting for mobile and general embedded devices."
Little MP4 players with QVGA screens (320x240 pixels) have been the main use of such a processor. Specification:http://www.ingenic.cn/eng/productServ/App/JZ4730/pfCustomPage.aspx
So when this 336MHz processor (not 400MHz, as being used in the notebook descriptions) is working an 800x480 pixel display and running extra things that you wouldn't get on a pocket MP4 player, it's busting a gut. It simply isn't capable of displaying a full 800x480 video. The Elonex web-page advice is:
Q. I cant view video clips properly.
A. The ONEt does not have powerful graphics decoding hardware so can only play small video clips. You should only play videos at 350x288 pixels at less than 129kbps to avoid jumpy graphics.
When you start up the video player it says:
video size <=350*288
video fps <=25 fps
video bitrate <= 129 kbps
video bpp <= 24 bpp
audio sample <=22.5 KHZ
audio bit rate <= 128 kbps
While 350x288 is the design maximum, it doesn't conform to standard sizes, so choosing less is the first option.
QVGA 340x240 is probably wisest choice for standard aspect ratio and 320x180 is a good choice for wide-screen.
You can reduce video files a bit further and make the processing load easier for the MPU by choosing mono-sound rather than stereo which you should note must not exceed 128kbps. (Although certainly use stereo for MP3 only audio files)
Finally, you have to reduce the frame rate. In the UK we are used to 25fps (PAL TV), but the ONEt struggles with this.
When you are doing the conversion choose to convert to 15fps (or possibly 12.5 fps)
Because the display is progressive, you don't see the flickering that you might experience with shuttered systems, e.g. conventional cinema film projectors would be unacceptable at these frame rates.
I took a near two hour DVD 9GB video (Roger Water's - The Wall Live in Berlin) and converted it to 340x240 15fps with stereo sound at 128kbps. It came out to 469MB. There are JPEG artefacts in the picture some of the time, such as the plain red background which is very "blocky" during first number by The Scorpions, but the singer is rendered without artefacts, and it's all completely OK on the next number. On a 4GB SDHC card you will get 16 hours of such video, enough for many a TV series.