Hello Colin, forgot I was a member here too.
The funny playback is due to the video codec you're using, try XVID:
http://www.soft32.com/download_2781.html
You'll have to make sure the frame width is devisable by 16. You're far better off rendering out a tga sequence, as this reduces the risk of lost rendering if the system crashes. Conversion to avi can be done through freely available software (use above link), or programs like adobe Premiere.
Radiosity can be cool, though if not setup correctly can take far to long to render. Me myself I like to use of big area lights for shadows & coloured distance lights with out shadows for bounce lights in order to fake it.
You could try a spinning light trick:
http://www.kolumbus.fi/erkki.halkka/plugpak/
There's also gMIL which is a surface Occlusion shader great for adding ambient shadows. Another shader out there is SG_AmbOcc found here:
http://www.informatik.hu-berlin.de/~goetsch/AmbOcc/
Before you get in to deep with clothFX, try to plan ahead, have a quick look at this scene:
http://www.Nemesis-CGI-Ltd.biz/Metalink.zip Open the properties panel for Layer2, click on the Dynamics tab followed by calculate.
It's just a sample setup with FX_MetaLink (Layer1 properties panel - displacement tab), to control a more detailed cloth with thickness that otherwise be impossible to do.
Shaun Lee Bishop.
Nemesis CGI Ltd.
http://www.nemesis-cgi-ltd.biz