What format must my video be encoded?
The Flash video format is .flv all the videos must be encoded in Flash.
There are a number of standalone Flash encoders such as the Sorenson encoder, FFMPEG, etc. etc.
However, it is most convenient to upload your videos on to services such as Blip.tv, Youtube, etc. where the correct Flash .flv formated files will be encoded and hosted from your .avi and other formats.
There are also online encoding services avalible such as Videorx who offer competitive pricing for encoding.