You might try converting the AVI to WMV -- most PC systems seem to like WMV
better.

There's a utility that will do this for you. PFCMedia or PFCPro either one
would work, and each has a free, fully functioning trial version. Just
download the demo and use it to convert. http://www.playsforcertain.com/

Or you can use Windows Movie Maker or the like.

When you insert the audio into the PowerPoint and the audio is just in
your computer not in the PowerPoint that is why it said, "Windows
cannot play..." Always put the music audio in the same folder as your
PowerPoint presentation on your computer.