You can try the following to fix the right-click issue.
- Click Start -> Run
- Type in: regsvr32 /u shmedia.dll
- Click 'OK'.
The above steps will disable video thumbnail previews, which from my experience tends to cause explorer to crash out or respond slowly when viewing a folder with a large number of video files. To undo the above steps, just repeat them, leaving out '/u' in step 2.
Unfortunately, this will not solve the Windows Media Player issue. Going by what you describe, it appears that you have a bad video codec installed. One thing you can try is installing a codec pack (e.g. FFDShow) and hope that one its codecs will replace the damaged codec. Otherwise, for the time you'll probably need to spend to trace the culprit, you would be quicker doing a clean install.