odd... i've been having troubles with my XP MCE for the last week which now appears to be related to playing AVI/XVID/MTS. The MCE seems to crash at the end of playback.
I couldnt figure out why it was happening so I thought I might just install XPSP3 on it and see - despite lots of TGB suggestions against doing it. This hosed it even more - the error still occurred and i also lost TV functionality (both live and recorded)!
Thankfully a reinstall of the .net 1.1 sp1, a re-register of the mce dlls (per aaron stebner blog post) and a reconfiguration of the DVBS tuners got my TV back (woohoo, now i got a new maori channel to add to the list of freeview channels i never switch too).
I still dont know whats causing the avi playback issues though.... maybe if i cant find out i will have to fire up the vista MCE (or a Win7 one in january) and give that another run