I regularly user DO for viewing movie files. I always had the thumbnail in the image style pane and the movies playing in the viewer pane.
Now, I get no more preview thumbnails (for any movie file type, only displaying the image of the file type extension)) and .wmv files don't play anymore in the viewer pane (displaying only codes caracters - although .avi files still play). My movie plugin settings seem correct: wmv is in the recognized file type form field and generate thumbnails is checked.
You have probably installed a video codec, or codec pack, which has taken over and/or broken the usual Windows Media decoder.
Temporarily re-associating Windows Media Player with the .wmv extension, as explained in the FAQ on video playback problems in Opus, may repair the registry settings and fix the problem.