Chakkaradeep: Your solution works, but what a terrible sacrifice in picture 
quality....
Compare normal settings without 3d effects enabled on a divx-xvid movie. And 
you will see the quality loss.
So that workaround is for the ones who can not live without 3d effects until  
the good folks at ubuntu solve this problem.

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Video does not work with Desktop Effects enabled
https://bugs.launchpad.net/bugs/102290
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