when i try to play video (any format). It tells me there was problem with mp3 format and red hat.
Bet that doesn't happen when you play open format audio or video!
Naturally, closed, proprietary, formats are restricted (by the rights-holder, and law) on gnu/linux.
Note: fedora 8 is legacy now. Many things will have stopped working. The current release is fedora 10, fedora 9 is still maintained, but will go legacy when fedora 11 is out. Upgrade to fedora 10, or find a distro with a slower release cycle - like CentOS.
See the following resources:
Technically, you can play restricted formats in totem if you install the gstreamer support for that - or Xine. You'd normally get them from a third-party repo ... but you are not up to date. This will leave you with compiling your software in most cases... or updating.
Xmms, IIRC, needs to be compiled especially to play mp3 - depending on where you got it.