System tray, where, depending on which codec pack you have installed, it often puts an icon there to show it's in use. DivX, Xvid, ffdshow, etc. ffdshow, when right-clicked on its icon in the system tray, shows which codecs it's using at the time.
Out of curiosity I tried the ridiculous step of extracting the audio from one of these clips in PD7, which created a huge wav file in the library. I dropped that into the voice track and it STILL won't play! (Again, plays in the library as a clip, but not on the timeline or preview.) Just to test, I made a DVD from another (non-AC3 audio) video I have and it plays fine, both in the timeline and the DVD preview.
Having uninstalled and installed various codec packs over the last five hours my conclusion is that PD7 doesn't work with avi files using AC3 audio. It can play them in the library but not on the timeline or anywhere else. Very frustrating since I have 80 hours of video I produced in that format and expected to be able to edit and burn them with PD7.
All the clips show identical audio properties in both the library and the timeline, so nothing is disappearing or changing in the move. It just won't play or encode them.