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I just converted a handful of DVD titles into .m4v format using Handbrake (normal mode) and none of them play well on XBMC. I'm streaming them from an external drive connected to my PC (via router/direct ethernet) but this is also the same location where the original .ifo/.bup files are located- I'm just trying to shrink the size of my collection down by compressing the videos I don't watch a lot.

When I open the .m4v file it looks very digitized, with large chunky pixelated squares. It eventually catches up and will play the normal looking video but if I even attempt to fast forward the video becomes digitized looking again.
My .avi's all play fine and my original dvd .ifo files play fine (over the network), and the encode is good because I can watch the .m4v files from my pc with WMP or VLC player.

Any suggestions?