That is standard practice in the digital camera business.
Apparently the camera writes proprietary information in the video file.
If that information is missing....."FILE ERROR".
I am having a SONY DSC - S500 Digi CAM with 6.0 MegaPixel and 1 GB memory card. the camera is able to shoot the movie and stores in .AVI format BUT if I copy any existing AVI file to the memory card, the camera is unable to playback the movie the error is "FILE ERROR".
The camera plays only the movie which is recorded by the camera.
Memory Card "Sony SD Pro Duo" 1 GB capacity.