Well... i mentioned earlier... I havent directly put HD videos and test. I had put a normal .DAT format only in between, and it didnt play. Though that was before i updated the OS. Other than that, i had put 1080p videos on it, just while copying, it asks if i want to convert it or not, i say yes, and it converts... in actually negligible time, cause it takes the same time to copy directly also. And i could play those videos in both native player and in mobo player. Though mobo player seemed better. The video looked HD enough for the screen, didnt chk what resolution it was in.
After the OS update though, i didnt put any video on my phone. Will get a higher capacity card, then try it out. Officially, in the 2.1 version of ROM, Defy cannot play 720p videos. Didnt find anything on the 2.2 release notes, but there were many upgrades fitted in that. May be it can play them now. Not sure.