Can you share some more details on your workflow, please ?
How are you generating/capturing or the MJPEG encoded footage ? Was the footage captured a while ago and archived in AVI files ?
Are you attempting the Windows Media Player playback and VLC conversion on a Windows 98 PC ?
Is it the conversion in VLC that fails to produce a file that is playable or is the import into Premiere and Video factory that is failing ?
Are you using an analogue video camera and capturing in MJPEG using a analogue to digital capture card ? In which case, what capture card and software are you using to capture the video ?
Or are you using a digital video camera of some kind (model?) and with which software ?
If you are using a capture card that produces MJPEG (like a DC30), have you tried capturing directly in Adobe Premiere 5.0 ?
AFAIK and AFAICR, consumer video cameras from the late 1990s were either analogue and would require a capture card to digitize and record video in a computer (MJPEG being popular) OR were digital and typically recorded in DV data format (on miniDV or Digital8 tape) which one would could transfer digitally to a computer using a FireWire (ieee1394) digitally .
So, I am guessing that you either have archived MJPEG footage in files OR that you are currently capturing, digitizing and compressing in MJPEG some analogue recordings and then attempting to import them into a video editor. Please correct me if I am wrong.