1) Try logging into your machine as a different user and seeing if the videos work. Could be something corrupt in your C:\Documents and Settings\%userdir%\
2) Try removing both IE and Firefox. Then install IE ONLY and try to see if it works.
I'd guess that there is some window waiting for a user response coming up in the background, perhaps the little bar at the top waiting to install an activex control. Could also be firewall behaviour.
Try an Alt +Tab when it's hanging and see if there is another application waiting for user input.
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