okay, a few things to check.........
during installation, if it says that it has trouble replacing a .ax file, that means you never actually uninstalled the previous codec. to replace the codec, you must uninstall whatever version of xvid you have, restart your computer, and then install the new xvid.
also, be aware of what else you have installed on your computer. if you have a codec pack installed, or ffdshow installed, those might be overriding the standalone xvid codec (if you run ffdshow you might wanna check to see if you have the latest version, and then try playing it using ffdshow)
i know from experience codecs are a pain in the ass, so i wish you the best of luck in getting them all sorted
on my computer, i only have divx 3.11 alpha (which i installed first), xvid 1.0 RC 2 (i use this to decode divx 5 encodes), and ogm and mkv support, plus maybe a few audio codecs. find the combination that works best for you