The converted movie plays fine on my PSP. I can fast forward and reverse. The problem is that the Goto feature doesn't work in the movies. If I attempt to jump to the middle of a movie, my PSP locks up and I have to power it off to get out of it. This also happens if I exit the movie in the middle. Normally the PSP picks up where you left off, but this bug means the PSP locks up when I try to continue the movie.
It's not a problem with my PSP because I keep up to date with the firmware patches and it works fine on movies that I've converted with my other encoder.