I just loaded townmsk1.avi in the \townavi\ directory into VirtualDub (http://www.geocities.com/virtualdub/) and saved it with 'Save as old-format AVI'. The result was a 32MB large file, which I renamed to townmsk1.avi and started W&W.

And lo and behold, I was able to enter the Town Hall and leave the city via the eastern gate.

If that works for other people too, you might post it here.

Too bad that now my D3D-mode is unavailable and I have to play in software-mode. Any solution for that?