I tried various videos in different formats and I have concluded that the issue is that the hardware (given that only one core is used, and no GPU is used) is too slow.
Except for x265, which is not supported by MPlayer, the rest played. The 1080p videos were too much and the video and audio desynchronized very fast and the motion was very bad.
Lower resolution videos in 720p desynchronized in action packed scenes, but gradually recovered, unfortunately not very pleasant to look at.
Even lower resolution videos played fine.
I think I may look for a better new and more modern motherboard and a CPU with more single-core performance to build a proper Icaros Desktop Live system.
I also realized that the CMOS battery is now dead, I wonder if any of the USB issues I faced earlier were because of the dying battery. I will replace it soon, and I will let you know.
Then I will close this post as it is starting to get off-topic.