[underworld123]

Thanks! If I inderstand this correctly, we are not changing the audio (assuming that audio is not a problem on fire tv) and only encoding the video so that it plays correctly (as video is the source of all the issues)

Correct, with those settings the audio will be untouched and will be the same as the source audio, the only thing you'll be doing is re-encoding the video.

As far as the audio goes, XBMC on the FTV will pass-through the audio (if your using a AVR) or it will downmix it, depending on your settings. Also to clarify, as to DTS-HD, XBMC will extract the core and pass-through DTS so you don't need to use the DTS-HD track and can opt to use the DTS track instead. However, I always encode (when possible) using the DTS-HD track with DTS-HD pass-through set so that my encodes are future proof.

I just encoded a video with the settings that you recommended. The resulting video had the video codec: H264 - MPEG4 AVC (part 10) (avc1). It played in XBMC, but I was under the impression that FTV did not play AVC1 files. Kindly advice.