This may not exactly be what you want, but it may be a better solution.
There are those programs that are made to turn a PC into a livingroom-multimedia-system (also called HTPC, which stands for home theather PC). These programs can do multiple things: play DVDs, video files (what formats depends on the installed codecs), music files (again, depends on the installed codecs) and possibly much more (image viewing, video recording, dvd copying, playing emulated classic games etc). By hooking such a system up to your TV, you've gained an all-in-one machine.
By inserting a disc with XVID videos, you can just play them through the menu of the HTPC software. When you have a special remote control, it's really easy, like working the menu of a DVD player.
So what kind of software is that? Well there is quite a lot out there. For Windows, there's of course Microsoft's XP MCE (a special version of Windows XP). Other applications are (for example) MyHTPC or the software that comes with the ATi remote controls.
There's also some very nice software for Linux (if you are into that). I, myself, use Freevo for Linux on my HTPC, together with my ATi remote control. Works like a charm!