Thank you, TRAIN.

I downloaded and installed K-Lite Codec Pack 4.4.2, renamed the file into mpg, and it worked (AVI is still giving the same error - at that time I did not receive your reply yet).

Then, after installing the MPEG-2 plugin as you recommended, AVI works !
(The plugin v.3.1 readme says it is applicable to VirtualDub 1.8.1 and later only - but I have 1.7.8, it works too).