I'm not sure about current versions, but with an older version of WMP you need a codec installed to be able to view MPEG-2. I don't know if you can get free MPEG-2 codecs, but DVD player software like PowerDVD will install the appropriate codec.
I *think* that DivX also includes backward compatability support for MPEG-2.
Either way... you need to install extra bits and pieces.
MPEG-1 is pretty much universal. I'd stick with that.
