Ive found the problem and solved the issue.
My motherboard driver disk included a realtek audio driver that somehow prevented playback of the videos. The error however showed up as a missing codec error message. This was true playing the videos via windows media player, windows movies AND the ms flight sim launcher.
I removed the driver and installed a later version, now the intro videos can play and the msfs installer runs as normal.
Thanks for the suggestions.
I hope this explanation can help someone else in future.