First: Please don't double post. There, I said it, now noone else has to.
Second: That doesnt sound like a codec problem, it sounds more like youve somehow gotten a bad copy of the battle animation files. Are you using the original discs? If so then try reinstalling it one more time and then installing the upside-dpwn movie patch.
Are you using the 1.02 patch? If not, get it (I dont have a link but someone else may have one offhand, or just go to Eidos site). Simple to use, just do what the instructions say and DONT check the NVidia box. That will give you hardware acceleration (provided 1.02 applies to your card, it does to any GeForce2), which Im not sure is even a solution, as most of the time its running in hardware rendering mode thats the problem to begin with. But still worth a try.