Probably just need to lower the bitrate of the file, sounds like its going out of sync due to the file being too hard to render.

I had this problem on my W760 Sony phone and its the reason I just got the N900 so I hope I dont find I have the same problem when I get mine in the next couple of days.

Oh and you really should not put H264 in a .AVI, use it in a .MP4 or .MKV container for proper support. I do not think the N900 has .MKV support out of the box so .MP4 is the best choice.

I assume that the N900 should handle a LC AAC file of moderate bitrate + H264 encoded with 3.0 or 3.1 profile with the native resolution of the N900 screen without issue.

If I can manage to remember to find this post I will let you know my findings when I get mine. I have a lot of encoding experience and can give you an optimal encoding setting / guide for the N900 if we do not already have one posted on here.

I would definitely be using h264 not xvid, a nice device like the N900 should not be forced to live in the past with those now outdated codecs, X264 is higher quality and lower file size, quite important when your limited to around 32gb or so of space.