Are you playing windowed or fullscreen?
The instructions that I've found on the site for playing the game in Windows 7 do not apply to Windows 8. I am not sure if it's because they are incomplete, or there are additional steps for Windows 8. In any case, it can't hurt to try at the bottom of the thread here.
Trying in a virtual machine will work for the base game, the TC will not install if you are running it with any virtualization technology.
If your game is freezing while playing the movies but working when you delete the folder, what that tells me is that either Slocket's right in that the videos are fine and you can't decode them OR there may be a problem with your version of those files. You may want to try getting fresh copies of those files from your CD. If that doesn't work, maybe you need fresh copies from someone on the board.