Sounds like from the gate you only had basic Win codecs that WMP had got which is very limited to I would think as most new avi alot use XviD for example which I dont think is even a part of the fetch codecs that WMP gets. I would seriously consider removing DivX and all other codecs you can find in spots like Add Remove or through search and then just get then Mega pack and call it a day as that should be the fix for you perhaps...
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