khnk222: Please try installing the RAD Video Tools:
http://www.radgametools.com/bnkdown.htm Downloading RAD Video Tools allowed me to at least see that the bik files themselves are completely fine. The issue appears to be how they are loaded when the Pharaoh game actually starts. Also, I think it may be due to a graphics card update since the CD version also does not work properly either.
EDIT: I found the cause! If you are getting issues playing videos on your secondary monitor (ie, the one being listed as Monitor 2), switch to the primary monitor (ie the one listed as Monitor 1) and it should go away. This happened to me with the cinematics (they appeared garbled on my 1920x1080 monitor but not on my 1680x1050 monitor)