Over the past weekend there has been a minor obsession with The Arabian Nights in our house. We have a DVD produced by Hallmark and released in 1999 -- but it's hardly Hallmark-fare. It's a captivating production and also very funny (John Leguizamo plays the genie of the lamp and he is uproarious.) One caveat, however... This production does not hide or candy coat the fact that, in the story, the sultan's madness is triggered by an adulterous relationship between his wife and his brother. Also, the violence in the production is depicted in ways which some might not find appropriate for children. Hence, if you plan to show this to a child, I strongly recommend pre-screening it. Some children might find it upsetting and others might be fine.
This also puts me in mind of 2 wonderful books which are told within the framework of the Arabian Nights. One book, The Storyteller's Daughter by Cameron Dokey, is told from the perspective of Shaharazad -- her emotional process & development of the tales. The other book, Shadow Spinner by Susan Fletcher, is narrated by a young girl who is given the task of sneaking out of the palace to help Shaharazad track down more stories.
If you seek enchantment, I highly recommend these books (and the DVD to top things off...)