The process of getting divx files to play on a PS3 can be anoying. I am not sure why Sony and Divx decided to make the process hard. Perhaps that Divx wanted to be seen and have their video player used because Divx owns the format rights?

Whatever the case may be, Divx and avi files can be played on your PC by following these directions found on the Divx website: http://vod.divx.com/ps3.php

Follow up:

There will be video that you can watch. Follow the directions. You will need to download the Divx Player, register, add a device (Sony), and put in the Divx code that is on your PS3. Once you have the Divx file downloaded there is no need to burn a disk. Save a disk and setup a media center on your PC. If your PC and PS3 are on the same network you can share the video.divx file./

If you need help on setting up the media center in Windows Vista visit this link: http://askyourpc.com/blog1.php/2008/12/25/how-do-i-setup-a-media-center-in-vista
once it is setup, search for the media center on the PS3 and go into videos to find the video.divx file. You should put the video.divx file inside the videos folder on the PC.

Open the file from the PS3 and Divx will install on your PS3. If you notice that some avi files do not play, it is probably because the format of the audio or video in the file is not Divx it is another format such as Xvid.

The reason there are so many file formats is because programmers try to make better compressions of files, programs try to have better audio quality with their own file types, and other reasons that make little sense to people who just want to watch videos.

Now you can watch avi/divx Videos On Demand from your PC media center!