It's highly possible you need the Xvid Codec before you can play your file.
What I suggest to a lot of people is to pick up this:
http://www.mediacodec.org/
It's called the Windows Essentials Codec Pack.
Once you install that you should be able to watch an Xvid format file along with a ton of other formats without having to download and configure a bunch of separate codec packages.
Hope that helps!
-Phantomwalker