I had problems uploading videos and converting also.

I changed the line
$cmd_mencoder = "$config[mencoder] '$video_src' -o $video_flv -of lavf -oac mp3lame -lameopts abr:br=56 -ovc lavc -lavcopts vcodec=flv:vbitrate=500:mbd=2:mv0:trell:v4mv:cbp:l ast_pred=3 -srate 22050 -lavfopts i_certify_that_my_video_stream_does_not_use_b_fram es";

to

$cmd_mencoder = "$config[mencoder] '$video_src' -o $video_flv -of lavf -oac mp3lame -lameopts abr:br=56 -ovc lavc -lavcopts vcodec=flv:vbitrate=500:mbd=2:mv0:trell:v4mv:cbp:l ast_pred=3 -srate 22050 -ofps 24";

in /includes/settings/video_conversion.php

Now all seems to be working well.

I am using
MEncoder dev-SVN-r24115-3.4.6 (C) 2000-2007 MPlayer Team


So if your having trouble uploading/converting check to see if you are using a newer version of mplayer and if so try this fix.