Experiment.... make a copy of the prologue.avi file and substitute it with something else. If it plays through, then it may be a video codec that is missing. Otherwise there is something else at issue.
Had something to do with the tftclauncher.exe. Seems to work the first time then crash every time after. Made backups of the launcher and other exes and restoring works. I've been playing using the xwingalliance.exe to launch the game and its been working fine. Is the tftclauncher really necessary? Can I create usable pilot files from the standard launcher?