I have a DVD-AVI player Chilli/Yamada, and I bought it to play AVI on a large screen and the problem I had with it was that the audio and the video started fine then the video would stop for a mili second every so often and the sync between the two because very noticeable. Encoding the avi with a Divx encoder and it worked fine. By far the best way is to play AVI's though a X-Box works with everything perfectly.
Failing that I use Allisoft AVI to DVD converter, works but is time consuming.