First Xvid is a
highly compressed format. It is a
distribution format, not meant to be edited, but distributed over the internet. Yes I know that VS and others say they are able to edit the format, and they are, but most of the time with a great deal of difficulty.
Now since you know that video is using Xvid, you should go to the Xvid site and download the Xvid codec from there. Why? Because you're problem most likely lies with your installing a
Mega Codec Pack. These most often contain a hodge podge of codecs, many that conflict with each other, not to mention with codecs already installed on your system.
So first uninstall the mega-codec pack. Then download the Xvid codec from their site found here:
http://www.xvid.org.
You may also want to convert the MP3 audio to WAV. VS seems to handle WAV files much better. MP3 is not a
real audio file. MP3 is a video file, that has the video stripped away. So at times video editors, such as VS, fails when it is given an MP3
audio file, because it is searching for the video part of that file, which of course is not there.
Many of us use a
free and powerful audio editor called
Audactiy, to convert audio files. You can get it here:
http://audacity.sourceforge.net/