I have seen a number of different posts about the best settings to encode videos for the Droid X, and I have found a method that I am extremely happy with. I use these settings to encode HD MKV files for playback on the Droid X. This method results in video without stuttering and free of Artifacts (no Audio/Video Sync issues either). These encodings play without a hitch, and only suffer slight sync issues that occur when changing volume, and skipping forwards/backwards into the video. This is not a huge problem, as the sync issues only last for 1-2 seconds maximum and do not take from the viewing experience. I have tested a large variety of Video players, and I have found that RockPlayer offers the smoothest playback available (in my experience). These settings will also work for many other file types, just make sure your Source resolution is higher than that of your output and you will be pleased!
Software Required: MediaCoder (Free, can be downloaded HERE)
Mode: Constant Bitrate (1400)
Source: Auto Select
Encoder: Auto Select (If your video card supports CUDA, select CUDA Encoder for faster encoding).
x264 Tab (On the right when selecting the Video Tab):
Profile: Baseline (This is extremely important!)
Average Bitrate: 160
MPEG Version: MPEG4
Aspect Ratio: Keep Display AR
Frame Rate: 25
Effects: Filter by Encoder
I hope these settings will come in handy for others. I have spent a lot of time testing different settings and Encoders, but I can honestly say I have gotten the best results using these!
Let me know how these settings work for you, if you find a better player please post your findings!