OK. I read your log file. It shows that DirectShow crashed when MC tries to start playing. There is no concrete info to indicate what the cause was. However, here are a few suggestions:
1. When you went to Video view, MC tried to build thumbnails for a few mpg files (including the file you tried to play). It seemed to be successful. Did you get thumbnails? The DirectShow graph that was used for thumbnailing is the same as the graph that was used for playing, except that it had no audio branch. Therefore my first suspicion is that your audio decoder filter caused the trouble. Go to Tools -> Options -> Playback -> DirectShow Playback Settings ... and find mpg in the list of file types played in DirectShow, on the right-side of the window. Select mpg (clicking it) in the list and click "Select Filters" button. Wait until the Select Filters window appears (it may take quite a few seconds). From the list that is labeled "Other filters", select an MPEG audio decoder other than "MPA Decoder Filter" (if you previously selected this, deselect it). Use FFDShow Audio decoder for example.
2. If that does not help, try deselect "JRiver Bitrate Monitor".
3. Try using a different MPEG Demultiplexer. In your case MC loaded "MainConcept MPEG Demultiplexer". If you select a different one, such as "MPEG-2 Demultiplexer" made by Microsoft, MC will use it instead of the MainConcept filter.