"Movies" are desktop video files with formats such as AVI, QuickTime, and MPEG, and file extensions such as .avi, .mov, .qt, .mpg, and .mpeg. A typical movie might include a speaker talking
An animated GIF file includes motion and has a .gif file extension. Though not technically movies, animated GIFs contain multiple images which stream to create an animation effect; they are often used to accent a design or Web site.
You can add movies and animated GIFs to slides from files on your computer, the Microsoft Clip Organizer, a network or intranet, or the Internet. To add the movie or animated GIF, insert it onto the specific slide using commands on the Insert menu. There are several ways you can start it: have it play automatically when the slide displays; click it with the mouse; or create a timing for it so that it plays after a certain delay. It can also be part of an animation sequence.
File Formats for Windows and Macs
Inserting movie and sound files into your PowerPoint presentation is as easy as inserting a picture, but while this insures your picture is embedded into your presentation, your movie or sound file is only linked.
PowerPoint doesn't have the capablility to embed movie and sound files, so your movie files must stay with your PowerPoint presentation file to be viewed. For instance, you are traveling out of town and you save your final presenation on a laptop, the movie will not be able to be viewed because the movie file was left behind. The best way to avoid this is to save your final presenation in a folder that contains all your video and audio files, then copy that whole folder over to your laptop.
Now, different computers have different ways of playing movie formats. Most of the time, if there is difficulty playing a movie in your presentation it's because of compatiblity with the computer's operating system instead of PowerPoint. Windows uses Multimedia Control Interface (MCI) code to play the movie, while Macintosh uses QuickTime.
Windows has difficulty playing QuickTime movies (.mov files) because MCI does not support this format. You can solve this problem by changing the format of the movie to something MCI does understand. For example, open the .mov file in QuickTime 5.0 (www.apple.com/quicktime) and export the file as an .avi file or .mpeg file.
Using Microsoft Windows Media Player for movies
If Microsoft PowerPoint won't play a movie file you try to insert, try to play the movie in Windows Media Player. First, test the movie outside of PowerPoint by opening Windows Media Player and opening your file from the File menu. If the movie doesn't play, Windows Media Player gives you detailed error messages and a Help link that can help you troubleshoot the problem.
If the movie plays in Windows Media Player, you can then insert it from within PowerPoint by clicking Object on the Insert menu and inserting it as a media clip.
A movie that you play in PowerPoint using Windows Media Player cannot have animation settings and special timings assigned to it; instead, you play it by clicking buttons in the Windows Media Player.
(partially from http://office.microsoft.com/assistance/PowerPoint )