Plays fine with the CTMod368 included app........ Works also with RealPlayer and several others from the market.
However, since about 2-3 days, I am running Player PRO from the market. Cost something, but it's by far the best I have tried and I tried alot of Video/MP3/MP4 apps. It's worth the money. They have a 7-day Trial on the market. Just install and see if it works and if you like it.
Hope this helps.
PS: If it doesn't play with PlayerPRO, than there is maybe something wrong in the way your .MP4 was encoded.