The problem with .avi is that it isn’t a single format. It is really just a standard container for arbitrary types of audio/video files. It can contain many different types of video or audio encodings inside it, and you will need to have the right codecs (coder/decoder - a driver that can encode and decode that type of video) for the file you have to be able to play it in the standard tools.
Using videolan is one option, as it uses built in decoders to view video instead of relying on codecs installed on your computer. The limitation with videolan is that you have to do all your viewing in that one program. If you prefer WMP or some other player, or if you want to do video conversion or editing, or copy a video to DVD, then you’ll probably need a codec again.
One way to get a lot of common codecs all at once is to install a “codec pack” which is a collection of codecs with one installer. One that I use is called the K-Lite Codec Pack.
If you just want to find out what codec your AVI file uses, get G-Spot which is a nifty tool where you can give it an AVI file and it’ll tell you exactly what codecs it uses and which ones you are missing. You can then plug the name of the codec into google and find out where to download it from.