I've tried AVI, MPG, MPEG, WMV and as described above happens, If the file is already on the web somewhere and If i enter in the direct URL to it then it gets added to the gallery but not when i try to upload one.
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I also get this error trying to upload a very small zip file.
Error uploading image file:
testzip.zip: Invalid file type (zip, application/octet-stream)