Well, I'll tell you how I solved the avi problem on my machine once and for all.
First, I downloaded VLC, which is a free, open source video player for the Mac. It plays virtually every avi file I've thrown at it perfectly without any hiccups or need for modifications whatsoever.
Second, I selected one of the avi files that I had on my system (with the ".avi" file extension) and typed command I (for get info). Then, with the get info window open, I clicked the "Open with" triangle and selected VLC as the default playback program and clicked "change all". A dialog screen will pop up asking to confirm the change for all avi files. I confirmed. That will set VLC as the default player for all avi files, while Quicktime remains the default for everything else (excluding wmv of course).
That's all there is to it. Now all avi files will open on your machine hassle and goof-proof free. No searching for codecs, no dealing with conflicts with Quicktime and third-party codecs, etc. With VLC, avi files "just work"
Frankly, Quicktime just isn't up to the task of handling avi files, certainly not out of the box. And for less than technically savvy user, there is no user friendly way of setting up Quicktime for handling all the avi files that are floating around out there and figuring out what codecs are for what. VLC allows you to skip all of that nonsense entirely.
I'm also becoming very impressed with the present state of VLC's playback engine, and becoming increasingly less enamored with Quicktime player's. For example, one of Quicktime 7's vaunted features was real time resizing of the playback window. It does this, but it seems labored and not very smooth on some videos, whereas VLC has this feature and it works effortlessly and smoothly on everything it plays. That may be due to Quicktime's reliance on core video and whether you have a high-end graphics card installed, but VLC doesn't seem to mind that you don't have a core image compatible graphics card and delivers live resizing far better than Quicktime.
All in all, I'm looking forward to some serious optimzing of Quicktime 7, because it's been rather disappointing since it's release. On the other hand, admittedly, H.264 looks tremendous.
1 gig emac superdrive Mac OS X (10.4.3)