welcome to Fedora... I assume you knew you coldn't play mp3's etc...? Of course it can read avi's as an avi is just a container format. it'll be the independent divx and mp3 streams inside it that it can't decode. go to the livna yum repository and add them as a standard yum repo. they include all the stuff fedora are too scared to include. install mplayer from there, or similar, and it'll all work just fine.
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