It sounds maybe like you have the same issue as i do. instead of using MP4, is 3GPP possible? i think i used like HandBrake or something as the video converter... you just need to make sure you have the right encoder, like H.264x or something. sorry for being a little vague, it's been a while. Also, if it's possible, don't bother worrying about android 2.1 anymore, and also, something things just WILL NOT WORK IN EMULATOR. so if it works on a lot of devices, then just assume it works (especially with different manufacurers)
here, you can read my problem and how i solved the issue (after a long time and no one had an answer). i explained in a lot more detail here: android media player not working