After converting videos they show up in iTunes. However, when I try to play them I get the following message "The movie could not be used because the original file could not be found"

The most likely reason is that you have unselected the "Copy To iTunes Media Folder when importing to Library" option on the Advanced Tab of iTunes preferences. Oftentimes folks disable this when they want to maintain their video files in a different location. Open the iVI Preferences window (from the iVI menu or Setting button), select the Converted File Tab and on the tab for the media type you are converting (Home Movie, TV Shows or Movies) use the destination drop down to select the folder you'd like to keep your videos in. Then click the import into iTunes option and deselect the Delete Converted File option.