I've had the same problem, heres how I fixed it:
I installed the xvid codec but was unable to view xvid encoded movies in windows media player. Why I think this happens is that xvid is not automatically recognized as a codec when opening a video.
In order to view a xvid file, you have to manually set the codec that you are using to the xvid mpeg-4. Im not sure if you can do this in windows media player, I downloaded a little viewer called 'virtual dub' which allowed me to configure which codec i used. Problem solved.