I am specialized in Divx and WMV formats, which makes the files' sizes even smaller. I hope I have answered your questions. W indows Media Player 7 will not interfere with any divx codecs. I believe you need to upgrade to WMP7. I don't think there is wmv8 codecs.
Picture is fine.
I am using windows media player 6.4 on Windows 98. 3. upgrade drivers for you sound card. The reason for divx is that we are trying to get away from .rm. Realmedia is a such crappy format, and it pixelates. Win2k machines are having problems with it.