Your post doesn't tell anything about resolution problems, and hardly anything about codec problems. So the subject line doesn't really cover the contents.
I couldn't locate an online version of the user manual, so I couldn't check file types and codecs are supported. But, avi being a container, it can contain quite a lot of different formats. Maybe your avi's are just the wrong ones. And, lacking that manual, I couldn't find what it tells about installing new firmware with more codecs.
Finally, are you sure PC Manager is supposed to do codec conversion? As far as I know, it just gives access to files.
First of all I'm Dutch, so I'll try my best English.
I own a LE46A956D1MXXQ. I couldn't find the PC Manager at the download center after searching by type no. But finally found it elsewhere, it's version 184.108.40.2060.
The problem is that my TV can only handle a couple of *.mp4 *.mpg *.ts and *.vob files. It doesn't play *.avi files at all.
The question is where I can find codecs and install them at the TV or if there's a newer version of the PC Manager.