I went to the LG site and found NO EXACT SPECIFICATION for the video encoding.
I found "DivX" and "MPEG4" but those have some dozens of standards.
This means you will have to call it in or experiment till you find it.
What I would try next is HANDBRAKE and try it's MPEG4 encoding.
My dvd player model is DV498H. The box said it can play divx movie from USB drive. I put JPEG picture, it display perfectly without any problem, but it cant detect any video file. I've convert video type into divx format, but its still not work. What type of video format or video extension that can play with this DVD player using USB Plus features??