But on the last page of that tutorial someone had suggested Prism Video Converter, I tried it and it's great, so here it goes for anyone interested:
http://www.nchsoftware.com/prism/plus.html
freeware, user friendly interface...and it works!

Thanks Drew!
... anyways, just wanted to ask, do I have to convert the videos myself then put them on the itunes and ipod or does itunes do conversion as well? 
... but I didn't appreciate the screensaver either...