I have just had the same problem. When I tried to upload a new video it came up with the message Warning header may not contain more than a single header. It let me post the challenge without a video though.
Yes, there is something wrong with the video conversion section of the site and I don't know when I will be able to fix it. I have just tried uploading two videos, one in My dog's profile and the other in the challenge using the file extension FLV and it was fine. So I think if you use or convert your videos to FLV at least for now it will be fine. I'm sorry for the inconvenience and I hope to fix it soon.