This is apparently still happening. I read posts from 2008 talking about this.
So is there a way today to save the animation as an AVI file? If not why is there an option for it?

I'm on Vista64, quad, 8gb ram. Vue 8 inf with latest update (47776).

/me is quite confused

Which AVI compression and folder are you saving as in your Render Animation settings?

 It doesn't matter which compression I chose or no compression it crashes every time.
I'm saving to a work directory on the same disk.

How many frames?  How big are the frames?  When do things crash?

 Frame size: 1024 x 768
Amount of frames I've tested: 10, 15, 35, 50

Steps:
Simple anim set up with car to go from A to B (the Mercedces that comes with Vue).
LMB click on 'Animation render options', low right corner.
Click in section 'Channel files' the 'browse' button.
At the bot of the dialog select AVI.
Dialog pups up 'Please select color..' something.
If one selects something it'll crash right away or as soon as you click 'OK'.
If you click 'Cancel' all is ok I think,  at least it doesn't crash, am testing now with batch render if it'll render properly. Have other stuff rendering at the moment.

"Frame size: 1024 x 768"

Bingo!

AVI can only render in traditional "video" sizes - 720x480 for NTSC and 720x576 for PAL, or flavors of HD (1280x720, 1440x1080 1.33 stretched pixels, and 1920x1080). I don't exactly recall, but you MIGHT be able to render smaller like 360x240...?

They should have some form of drop-down menu of standard sizes you can pick from - don't stray outside the numbers.

Try Quicktime - the Animation Codec set to 100% is uncompressed, and to tell you the truth, I can't really tell the difference between 100 and 75% if you want a smaller file size. But if it's going to go to something like After Effects, played with, then re-rendered out, or part of an overall animation you will be editing together, then you really should set it to 100% - otherwise you may start to run into something akin to a Xerox of a Xerox - does that make sense?

QT can also do "odd sizing" so your 1024x768 would render out just fine. This is also why you find renders at VERY odd sizes just for FX elements - a 150 wide by 1200 tall animation of rising steam with an alpha - get it?

If you're editing these together, you would bring them into something like Adobe Premiere, or Apple Final Cut Pro, Sony Vegas, Pinnacle Studio, AVID (they have a bunch, really...), and when you've edited your clips to form the complete movie, you render out whatever format you want from THERE - QT, AVI, MXF, etc.

I hope this helps-

-Lew

 Well it "behaved" when I canceled the mid dialogue and rendered my 50 1024 x 768 frames to avi without problem. Just wish I could chose my compression settings without the crash. Now I'm stuck with whatever the default is. 

I haven't tried it in VUE yet because in every editing program I've used, if you don't select the proper size for AVI you can't render it.

You don't need it to "behave" while crossing your fingers - you need repeatability you can count on and If AVI isn't the answer when doing a non-standard video size, then try something else.

Not kidding - try QT. I suggest the Animation codec, and pick any compression percentage you like. There's also Sorenson, H.264, etc. Plenty of options.
-Lew

Yeah, rendering AVI seems to be a verrry old issue with Vue (IFAIK since Vue6)...
So, the best choice (really) is to render to some 'still format' (TGA, TIFF those can handle alpha if you need it) then compile in any video editor (VirtualDub the simplest one).