My apologies for the misunderstanding..
Sasha,
You and the advice about divx in this case are absolutely right. It would appear that the file in question was Divx encoded. I should have asked more questions rather than trying to give the guy what I thought was the most straightforward solution to the problem given an assumed set of circumstances. You are quite right also about there being a number of different codecs for AVI files, but most of them are natively supported by Microsoft. Only recently have we seen AVI highjacked by DIV 3 and DIV4 type files which do require additional codecs.
Since the guy was running windows ME, it is likely that he has been successfully viewing AVI files for a number of years. I just assumed that he was perplexed as to why something was not working under Real Player that had previously worked.
AVI is a Microsoft defacto standard for windows video (recently supplanted by ASF). Microsoft supports MPEG4 through type MP43 codec. Where the confusion starts is that the authors of Divx chose to use the avi file extension causing people to believe nothing was new under the sun. Well, Microsoft hasn't yet adopted Divx and this won't be shipping with any OS. The Divx people would have been much better off choosing a whole different file type to avoid the end user confusion. Older versions of Media player for windows would spit out an error message and tell you that a codec was missing. Now you get his reported symptom under windows, and get an obscure error under XP Player with no useful diagnostic information when you go to the suggested followup.
Something worth trying in the future..to find out what kind of codec is used to encode a file, open it under wordpad or any text editor. The first few lines of the file will display the codec type..for example div3, div4 or I263/H263 which are the original AVI codecs.
Peace..
EBS