We're having the same problem. I'm trying to transfer the digital copy of movies that I have purchased. They are on my computer as WMV or MP4 files, when I click on the "Play with Zune" I get an error code of "C00D11E7". Everything I've searched in Zune, tells me I needed purchase the movies through Zune, which aren't available, but why would I want to purchase again. They play in my Windows Media Player, but I want them on my Zune. How do I fix this?
I bought the Zune 120, specifically to add movies. If I had known the movies wouldn't transfer I would have bought an IPod!