The June 12 Info Alley explains how to get Apple Video Player to play movies from your hard drive and offers some hints about playing MPEG movies:
"Apple Video Player 1.6 (included with Mac OS 7.6.x) lets users set a preference to Look on CDs, Look on Hard Disks and Look on Servers. Users can find this preference under the Setup menu in Apple Video Player.
Apple currently supports the playback of MPEG streams with QuickTime and the QuickTime MPEG extension. MPEG streams can be viewed by utilizing the Apple Video Player, QuickTime Movie Player application, or other applications that support QuickTime. The MPEG stream must be a legal, standard ISO 11172-1 file, with one MPEG video stream and one MPEG audio stream, in order to play back properly. It is also important to point out that not all streams created by MPEG encoders are legal. As a result, some MPEG files are not currently supported by Apple Video Player or Movie Player. In this case, users can try to playing the MPEG movie with a non-Apple application like Sparkle."