is there any way that I can play AVI files in iTunes/my iPod Video without having to convert the entire file? or if I have to, which program should I be using to retain the same quality!?
Sorry, you do indeed have to convert AVI files into a compatible format which your iPod video will recognize. My recommendation would be a great, free, powerful little app called iSquint - that will make the process as painless as possible for you.