Problem : Windows Explorer hangs/crashes when opening folders that have movie files(.avi files). I searched the internet for many solutions ranging from deleting some registry keys and also un-registering some Thumbnail creation dlls. But none of the solutions worked.
Solution : Finally, this is the solution that I cam up with and it works fine now. I have DivX as well as K-Lite codecs installed in my machine. So I first upgraded my DivX Package to the latest version available on the net. Then I installed the latested package of the K-Lite codec - while installing K-Lite prompted if I would like the un-install the DivX codecs as the same were being provided by K-Lite to. Fine - since I had read a detalied article that the problem of explorer crashing could be attributed to a corrupt xVid Codec which happens to be a part of DivX package as well as K-Lite.
So I happily unistalled the DivX one and installed the complete K-LIte package and re-started my machine. All things are fixed now and even ThumbNails come up fine.
Well, the trick seems to be in installing the latest K-Lite Codec package to fix this issue and removing all the confilicting codecs from your machine. Hope this info helps all those who are struck with this problem.