Great HOWTO! Executive Summary: Use VLC! From Playing AVI and DivX Files:

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This chapter from our book Troubleshooting Mac OS X discusses why some Audio Video Interleaved (AVI) multimedia files do not play in QuickTime and provides methods for playing AVIs on Mac OS X. About AVIs There has been confusion over AVI files since QuickTime® added support for such. AVI is a media container very similar to QuickTime, but with a unique data format. AVI was originally called Video for Windows® (VFW) and QuickTime supports the VFW format. However, most, if not all AVI playback issues arise with movies that have been compressed using CODECs (Compressor - Decompressor) that are unavailable for QuickTime in Mac OS X. In particular, the Indeo® CODEC, popular for video compression on PCs, has not been ported to Mac OS X. To further confuse the issue, many DivX-encoded files carry the .avi extension. QuickTime does not include native DivX support, even though QuickTime 6 and later support the ISO Standard MPEG-4 media compression format and DivX is based on MPEG-4 technology. Playing AVIs on Mac OS X I have found the following four methods will let me play most AVIs. While none of these methods are foolproof and some AVIs still refuse to play, one of these methods will usually work.

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