QuickTime X plays MPEG-2 media (http://support.apple.com/kb/TS3961), but QuickTime 7 requires a special Apple QuickTime MPEG-2 playback component (available for Mac or Windows) in order to play MPEG-2 files.
InqScribe continues to use the older media spec found in QuickTime 7, mainly because the newer spec found in QuickTime X (QTKit) does not support our method for creating subtitles.
What this boils down to is this: InqScribe can support MPEG-2 playback only if you previously installed Apple's MPEG-2 playback component for QuickTime 7.
For Mac users, there's a bit of a catch: if your system already has OSX Lion or later, Apple does not allow you to install the MPEG-2 component, with the reasoning that it is no longer needed for QuickTime X.
Windows XP, Vista, and Windows 7 users who rely on QuickTime do not have this limitation since those operating systems still use QuickTime 7, so you may still install the QuickTime MPEG-2 component in Windows QuickTime.*
*NOTE: Due to security risks, we do not recommend QuickTime for Windows users (more on this subject here).
We are working to revamp InqScribe’s media support in an upcoming release to address this and other media format issues.