Windows Explorer & .avi files dysfunction and system restore mal-function:

Specs:
Windows XP SP-3, RAM = 3.25 Gigs (recognized by Windows) 2 HD (1 at 500 Gigs,
2nd @ 200 Gigs), Samsung Monitor ("Starlight Touch"), HP Printer all-in-one

Hi:

I can open any windows file without problems, but when I attempt to open
any .AVI file (video file)--even if I just glide the mouse over the AVI file,
the following message occurs:

"Windows explorer has encountered a problem & needs to close.
If you were in the middle of something, the information you
were working on might be lost

For more information about this error, click here:
"Error signature
AppName: explorer.exe  AppVer: 6.0.2900.5512  ModName: unknown
ModVer: 0.0.0.0  Offset 00000000"

To view technical information about the error report, click here:
"exception Information
Code: OxOOOOOOOOOOOOO Adddress: OxOOO0000000000

System Information:
Windows NT 5.1 Build 2600
CPU Vendor Code:  00000F29  CPU Feature Code: BFEBFBFF
CPU AMD Feature Code: 00D1E824

Module 1
Explorer.EXE
Image Base: Ox01000000  Image
Size: 0x00000000
Checksum: 0x00102b2c  Time Stamp: 0x48025c30:

The following files will be placed in
C:\DOCUME~1\(my name)\LOCALS~1\Temp\836f_appcompat.txt"

If passed the mouse over an .flv file (Flash video) to highlight it--
nothing happpens
I can open & play it with RealPLayer
I cannot open an FLV file with home cinema (see below).

I have scanned my PC with Norton AV & Microsoft's Windows Defender &
Microsoft's Malicious Software Removal Tool No significant problems were found.

I have re-started Windows and I still run into this problem.

I have re-installed both the Windows Media classic player (v1.4.2499.0)
[Part of windows essential codec pack] (by re-installing the newest
windows essential codec pack) and RealPlayer.

I have also re-installed my video card's software
(Vision Tek Radeon HD 2400 Pro AGP) and updated my Printer(HP) software
and still have the same problem

I can play an AVI file from within either Windows Media Classic Player
(i.e open it and then select (open) an AVI file to play or within
RealPLayer (same mechanism)

It is when I just open the folder containing the avi files, and just
run my mouse over it to highlight it that the windows explorer error
message starts (before I even get a chance to click on the .AVI file
itself).

I also have .FLV files which I have started with RealPlayer without prob-
lems. But when I try to open the FLV file by first opening Windows Media
Classic, I get this message:
"Media Player Classic - Home Cinema has encountered a problem and needs to
close. We are sorry for the inconvenience.

Error signature:
AppName: mpc-hc.exe  AppVer: 1.4.2499.0  ModName: ntdll.dll
ModVer: 5.1.2600.5755  Offset: 0001072f"

Please note that a few days ago, I could open this .FLV file with Windows
Media Classic.
-------------
After the windows explorer error message, got:
"DrWatson Postmortem Debugger has encountered a problem and needs to close. 
We are sorry for the inconvenience."

Error signature:
EventType : BEX     P1 : drwtsn32.exe     P2 : 5.1.2600.0     P3 : 3b7d84a2
P4 : dbghelp.dll     P5 : 5.1.2600.5512     P6 : 4802a0b2     P7 : 0001295d
P8 : c0000409     P9 : 00000000  

Then again, I opened an AVi file with RealPlayer and got this message:

"DrWatson Postmortem Debugger has encountered a problem and
needs to close.

Error signature:
EventType : BEX     P1 : drwtsn32.exe     P2 : 5.1.2600.0     P3 : 3b7d84a2
P4 : dbghelp.dll     P5 : 5.1.2600.5512     P6 : 4802a0b2     P7 : 0001295d
P8 : c0000409     P9 : 00000000

to view tecnical information about the error report:
the following files will beincluded in this error report:
C:\DOCUME~1\(My name)\LOCALS~1\Temp\WER9c46.dir00\drwtsn32.exe.mdmp
C:\DOCUME~1\(My name)\LOCALS~1\Temp\WER9c46.dir00\appcompat.txt"

I have searched the documents & settings directory & have yet to find one of
these files.

Additionally, I have tried to use system restore for multiple different days
(restore points it set automatically) and each time I get the response that
it cannot set the computer back to that time. I certainly have more than the
required disc space required by system restore for this operation.

I have searched some Microsoft forums about this problem and found the follow-
ing "solutions":

"Copying & Renaming the Explorer.exe File:

Copy the Explorer.exe (Computer icon) file and paste it in the same folder.
A file "Copy of Explorer.exe" will be created in the folder.

Now change the file name to your name.exe.

•Change the Registry:

Now go to Start >> Run and type "regedit" and press enter key.
Navigate to HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows NT\
 Current Version\Winlogon.
In this folder, you will find a sub named "shell".
Double click it and rename the "explorer.exe" to "deshmukh.exe"

•6 Restart
Restart your computer after making this change.
Everything will be back to normal without any problems!

Tips & Warnings
Use Task Manager (Ctrl+Alt+Del) in order to run the explorer.exe
temporarily while you are following the above procedure."
----------------------
"How to Replace Explorer.Exe:

Viruses and malicious software can make deleterious changes to the
computers they infect, often deleting or modifying important system
files. If a virus or malware deletes or corrupts explorer.exe (the
shell, or interface, of a Windows operating system), essential con-
trols--such as the "Start" button or taskbar--will not appear, ren-
dering Windows difficult to use.

To replace explorer.exe, you can extract a good copy of the file
from your Windows XP or Vista disk and use Command Prompt to write
the file to your infected computer.

Instructions:

•1 Insert your Windows XP CD into a computer with an available op-
tical drive. You will need to use a computer OTHER than the one with
the infected explorer.exe.

•2 Right-click "Start" and click "Explore."
Select your Windows CD or DVD.
Type "explorer.exe" into the search box.

•3 Insert a USB drive or blank disc into the computer.
Right-click "Explorer.exe" and click "Copy."
Navigate to the USB drive, then click "Paste."
If you are using a CD or DVD, copy and paste the file to an empty
folder on the PC, then use disc-burning software to burn the file
to the writable media.

•4 Insert the USB drive, CD or DVD into the infected computer.
Simultaneously press "Ctrl," "Shift" and "Esc" to open Task Manager.

•5 Click the "Processes" tab.
Click "Image Name" to sort the processes alphabetically.
If "explorer.exe" is present, right-click the process,
 then click "End process."
Click "End process" again.

•6 Click "New Task" on the Applications tab.
Type "cmd.exe" into the box, then hit "Enter."

•7 Type "rename %systemroot%\explorer.exe %systemroot%\texplorer.exe"
into Command Prompt.
Hit "Enter."
Type "Yes,"
then hit "Enter," if prompted.

•8 Type "copy :\explorer.exe %systemroot%", replacing " "
with the name of your USB or optical drive.
Hit "Enter."

•9 Press "Alt" and "Tab" to return to Task Manager.
Click "New Task,"
then type "explorer.exe" into the window.

10 Hit "Enter" to launch explorer.exe.

Tips & Warnings
After restoring explorer.exe, run an antivirus to eliminate any infec-
tions from your computer.
If you saved or burnt explorer.exe to any location on your removable
media other than the main directory, the "copy" command in Command
Prompt must reflect that.
If you saved explorer.exe to the "new data" folder on your USB drive,
for example, you would need to change the copy command to read
"copy :\new data\explorer.exe %systemroot%.".

Viruses sometimes make changes to the registry to prevent explorer.exe
from running properly. If explorer.exe still does not work after re-
placing the file, use the "Startup Repair" or "Repair Install" option
on your Windows CD or DVD to repair Windows."

Do any of these suggestions make sense, in terms of the problem I have?
Do these problems point to coruption of both windows explorer AND system
restore, necessitating either a complete clean install or at least a
windows repair-in-place??

Any further help or sugestions appreciated.

Thanks.