Hard to say if your unit is on its last legs.
Have you had the AVI file for awhile and it started acting up? What is the bit rate of the avi? Are you playing through a network? Wired or wireless? If wireless, try wired.
Sometimes, if you hold the power button in for 5 seconds the unit will power down. Save you from having to bend over to pull the plug.
You're right...1.06.1 is the same as 1.06. It fixed problems for people who couldn't get 1.06 do to a bad path to the server.