Q: I just spent $20 on a movie and now it wont sync to or play on my iPod.

The 2G iPod can only go as high as 4.2.1.

To mofe easily find compatible apps:

apps for ios 4.2.1: Apple Support Communities

Apple Club

HT4972 Touch Game 4.2.1 Apps: Apple Support Communities

apps for 4.2.1 (also works for 3.1.3)

Tip - Finding 4.2.1 apps that work on an...: Apple Support Communities

  4.2.1 iPod 2nd generation unable to use any...: Apple Support Communities

See the following regardng syncing the movie:

iTunes: May be unable to transfer videos to iPhone, iPad, or iPod

iTunes: Frequently asked questions about viewing and syncing videos

You likely may have to download the SD version since the 2G can only sync/play SD videos. Try downloading by:

Downloading past purchases from the App Store, iBookstore, and iTunes Store

If you try redownloding by:

Downloading past purchases from the App Store, iBookstore, and iTunes Store

is there an option to downlod the SD version?

Otherwise request a refund:

How to Get a Refund from the App Store

Glad you are satisfied.