It may be because of your video acceleration settings in Windows Media Player. Try opening the program, and selecting
and clear some of the check boxes, such as "Use Overlays". Make a single change, and then test with a known "good" .avi or .wmv file.
You could also attempt to alter the hue, saturation, gamma, and contrast and overlay levels for the color profile under the Display Properties advanced settings for your video card.
However, I'm fairly sure that working with the acceleration settings for your video card under Windows Media Player will correct the problem. I recall seeing something similar in the past, and found the workaround in this area.
If not, you may have to start uninstalling codecs, and be careful about what you add. For instance, installing codec "packs" is really <i>not</i> a good way to add whatever codecs you need ... some of them are darned buggy, and some can interfere with each other, rendering any kind of playback impossible. Be very careful and selective when choosing what you install.
A program like <A HREF="http://www.headbands.com/gspot/" target="_new">GSpot</A> can be very useful in situations like this, so that you ending up installing the only the individual codecs needed for a particular file.