Why doesnt my wii play AVI files?  

You can download a software called VLC Media player.I use it to play avi files all the time.If I can get a link from download.com then I will post here.You can also do a search at download.com for that software.

Quick Media Lesson:
Video files have three parts, the Container, the Video and the Audio.
For a video to be played on a device (e.g. a Wii) said device has to support the format used by all three parts.
AVI is just the Container part, so if the format of the video or the audio is not supported by the Wii then you can not play the video on your Wii directly.

Now the Wii only supports a very small number of video & audio decoders, so unless you downloaded this file from a Wii-friendly site it is highly unlikely that it will play in the Wii. What you now need to do is convert it into a Wii friendly format. Now you can use VideoLAN (it is a great tool). I use a tool called MPlayer, but both of these tools are very hard to use for converting videos. Red Kawa has a free product called Wii Video 9. This can convert files to a format supported by the Wii. However the only audio format the Wii supports is uncompressed, so will create very large files. For a 30min show you will need a two gigabyte SD card.

You do have a second option, you can use the Opera web browser and some software installed on your computer to “stream” videos over to the Wii. Red Kawa has a product that does this. At least two other products exist, an open source product called WiiCR (free but a little hard to set up) and a company called Orb has a product to let you do this.

I have quickly played with each of the three. Orb did not work, WiiCR was to much of a pain to install and Red Kawa Media Centre X worked, but did lower the quality a lot more than I would consider acceptable.

avi is just a container. are you sure you have converted it in mjpg format? To be sure you shoud try to use a wii format video converter like wiitivi (http://www.wiitivi.com) for example.

avi is just a container. are you sure you have converted it in mjpg format? To be sure you shoud try to use a wii format video converter like wiitivi (http://www.wiitivi.com) for example.

avi is just a container. To convert video for wii you must convert it in mjpeg.
You should use a specific video encoder for wii like wiitivi http://www.wiitivi.com