If you convert a flic directly into AVI, you map your 256 colors to Millions, but still have the same few colors at lower quality - you actually get the bad sides of both formats! :o(
If you have the source for the flic (the 3DS scene!), you might want to render again to a truecolor format like TGA, and then assemble the images to AVI - this way you get all the colors into the animation.
And if you want higher quality and a more universal format, try QuickTime for Windows.