The last time I checked (about 3 years ago), the players could only play lower, VHS res divx semi-OK. My guess is that the scene hasn't improved a ton, as the Dreamcast simply doesn't have the CPU oomph for that sort of decoding. It's a 200 MHz Hitachi SH-4 chip if I remember, and I believe even a 300 MHz P2 struggles with Divx a bit (different architectures sure, but the P2 is most likely generally faster).