I'm sorry, but it is unlikely any of us are going to be able to offer much by way of help. It seems to me that the main problem is the codec used by your original video. It is the FICV codec which I have never heard of before -- though there are over 800 video formats which use the .avi extension, so that is hardly surprising. Moreover, the frame size (1280 x 962) is not a standard one.
I have not been able to find out much about that codec, except that it is made by a company called Mirillis, and that it is a DirectShow codec which a number of other editing programs also cannot play. See for example this thread:
http://forum.mirillis.com/viewtopic.php?f=36&t=12625 As far as I can recall, Corel also dropped support for DirectShow codecs around about VS 11.
I would have to agree with the main suggestion in that thread that the best solution would appear to be to use third party software to convert your video to a format which VS *can* play and edit. But what such third party software might be, I have no real idea apart from the program suggested in that thread itself. But again it is software I have never heard of before either!! That program is Xvid4PSP 5 -- though note the warning that the more recent version 6 might not work properly. You would need to do a Google search for that program. And if you find it, I would suggest converting to .m2ts format.