There was a similar question yesterday:
Here's what I found:
I came across this during my research on this problem:
Quote from the Apple Discussion Site (QuickTime)
MPEG (1 and 2) is meant to be used as a playback format. Because both the sound and video is in the same track they are difficult to edit.
Now that you know QT's limits you'll start adding to your Mac software. MPEG Streamclip (free) can convert the MPEG formats into editing formats (.dv) or extract and separate the sound and video.
Support for the .avi container was discontinued years ago by it's creators (Microsoft). People that still use it to distribute content are too lazy (or too ignorant) to follow industry standards.
QuickTime follows industry standards. Soon the world will move to MPEG-4 standards and your video files that use them will be viewable for years to come.
Window users have the same troubles editing MPEG (1 and 2) and need to download the same codecs as Mac users to view most .avi files. They have no advantage over QuickTime.
Unquote.

Hope it helps a little

QT, which drives iTunes, does not support AVI

P