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Well I do not understand why you need to have the program running when you change the settings.
You can run HOI settings program and set the resolution in game and you can right click on the desk top select properties-settings to change the resolution on the desktop.
 
First thing to do would be to install the latest patch.
 
THen run the settings program again to insure your resolution is what you want, then check that another AVI folder has not been created.
 
Let me know.