MC uses QuickTime engine for MP4 files. If QT doesn't work then the same goes with MC. You may want to search Internet for this matter. I think the digital video related forums have a lot of discussion about QT/Nero/MP4. Apple is going to release a new Windows version of QT in the near future. That may change the situation.
I have converted some of my DVDs to more established DivX Video + DD Audio format (in AVI container). MC has no problems with them if the needed DirectDraw filters are installed to the operating system.
I have also tried some videos packed in
Matroska (MKV) containers and basic playback seems to work. Matroska can contain chapter information, metadata tagging and subtitles, but I have not tried them. I suppose that using those functions is not possible without a new interface inside MC. The Matroska container format is very promising because the users are not limited to certain codecs and it is an open standard.
These things are certainly something to think about for the next MC version.