Orion66: Renaming that file and all other.ax files in that directory don't work. I had done that and the cutscene at the end of day2 7-10 still crashed game. Checking system32 directory after that showed that the original files just replicated themselves so I had the .ax files and the ones I renamed to .bak.
It'll play the first few seconds of the scene, then crash. Exiting out of the scene before it crashes helps.
The files for the cutscene are in Gabriel Knight 3/Data, listed as 207aend, etc. If you can't play them directly by clicking on the file, go here:
http://www.radgametools.com/
and click on bink video link. Download and install it. Now you should be able to play the cutscenes directly by clicking on the files.
I just had the same issue in Day 2. I don't have the .ax file indicated in the earlier solution (with Win7 x64) but it's easy enough to play the bik files using the RAD video tools, so I went that route. Takes me out of the game for a moment, but it's the first crash, and I save often enough, I think. At least I can skip the scene but still get the idea of what it contained. Good suggestion. :)