I use AVI's (DivX codec) because they give high quality video for a relatively small file size. If you are running a PC with Windows XP and the standard media player the DivX Pro 5.1.1 Codec should work. There are also versions that work with MAC's.
Go to ....
http://www.divx.com/divx/
where a free copy of the codec (with adware) can be downloaded.
If you try to run the clips with an older version the avi will stick or hang halfway through.
It's well worth the effort as the high quality of DivX AVI's are far better than wmv's.