Your best bet is to trasncode your .mp4 to a different format before using it in AE.
Try opening it in Quicktime Pro, and export it to a self-contained movie using a codec such as "Animation" at best and fully quality.
Make sure the audio gets exported to (Linear PCM, or some equivalent, at 48khz 16-bit).
CS3 videos apps are not too happy when dealing with H264 footage, so depending on your muxing parameters it can fail to read it. I would recommand you, if you have room on your HDD, to transcode it to Quicktime Animation codec to avoid loss of quality.
I agree with my two colleagues - for CS3, converting is advisable. Use Quicktime Pro, ffmpeg, MPEGStreamclip, VirtualDub (with MPEG plug-in) or whatever you have at hand to generate a Quicktime file or AVI with a more conventional CoDec from your clip. Of course many of these issues can be bypassed with CS4, so if you have the time, downloading the trial and checking it out may be worth a spin.
For licencing reasons, the mpeg based codecs (using a third party encoder/decoder) are not available within AE trial version. So no Mpeg2 or h264 in it. Only on retail version.