Currently software is trying to render the videos under incorrect codecs, which in turn results in bad playback try to find a codec called Duck true motion 2.0 or microsoft Direct show package.
neither are still in production nor are they supported but this is the only possible way to get FMV working properley
goodluck
EDIT: also have the FFVII XP patch installed and the upside down FMV patch which can help.
Not that is is relevent to the FMV, but get the choco patch to or you will run into problems.
I just had another idea also, are you using a Dual core processor or SLI graphics because the data threads would be split up then resulting in choppy timing for a game intended to use bulk threads on a singular processor with 1997 harware.