A new installed XP SP2 can basically play any MPEG4 file, using microsoft's filters. DIv3 is played by msmpeg4.3 or by DivX 3.11. So, either install DIvX 3.11 either assign all divx files to divx decoder (generic MPEG4 support).
For codec recomendations please read this topic:
http://forum.bsplayer.org/viewtopic.php?t=3042