Upgrade the Neuros Recorder firmware to 2.00.019 and it should work fine, here is the link:
http://www.neurostechnology.com/support/support_MPEG4_R2updates.asp
http://www.neurostechnology.com/support/support_MPEG4_R2updates.asp
That was the answer! File created under version 2.00.019 DO play from the /VIDEO folder. THANK YOU, THANK YOU, THANK YOU.
Files are still missing a 'TITLE' tag according to 'PSP Video 9', but since the File Name is now displayed on the PSP Title line(which accept spaces and long file names), this is irrelevant.
Thanks again.