I've managed, after some hassle, to get videos onto the iphone simulator. Now when I go into the media album using the UIImagePicker I can see the video, and play it. When I then press the "Choose" button the simulator holds on the "Compressing Video..." dialog.
I'm using iOS 4.3, I've been unsuccessful when it comes to loading videos onto the 4.2 simulator. I've tried using a .mov file that was taken on a ipod touch, a .m4v file that I created in iTunes from that .mov file and also a random .m4v file from a completely different source (that I created using Quicktime 7).
Is this a known hassle with the simulator? Am I doing something wrong?
My only suggestion here is to build it onto a device and see what happens.
It's a late answer but you can fix it by following this procedure: