It's probably the VirtualDub fix:
The fix is to uncompress the town video file using a free utility called: Virtualdub:
Go to the following site:
http://www186.pair.com/vdub/
Once you're there, download Virtualdub, install it, and then load the file "townmsk1.avi" from the "Townavi" directory in your Wizards & Warriors folder into Virtualdub. Save it with the "Save as old-format AVI" option with a new file name. You will get back a 32MB file. Close out Virtualdub and then rename the new file townmsk1.avi (over the old file). Do the same procedure to the other two town mask files.