I am able to divulge some useful technical details. The videos in Ys I are MPEG-1 encoded. For the game to be able to play them correctly, the following three components are required:
- quartz (a component of Microsoft ActiveMovie)
- amstream (also a component of Microsoft ActiveMovie)
- an implementation of the MPEG-1 video codec
I presume that you are running Windows. If so, be aware that Windows no longer installs a codec to handle MPEG-1 video by default. I believe that this has been the case since the release of Windows 10. According to the following article, you can obtain an implementation of it by visiting the Microsoft Store and downloading the official "MPEG-2 Video Extension" codec pack.
https://support.microsoft.com/en-us/windows/codecs-in-media-player-d5c2cdcd-83a2-4805-abb0-c6888138e456 Note that this codec pack is provided by Microsoft themselves and covers the MPEG-1 codec, despite its name implying that only MPEG-2 is covered. Another way to obtain an implementation of this codec is to install a third-party codec pack. The only one that I could recommend in good faith would be "LAVFilters". However, the number of codecs provided by LAVFilters is enormous. Unless you need these extra codecs for other purposes, I would suggest you use Microsoft's implementation if possible.
As for the two ActiveMovie components, you should already have them in Windows. The only possible exception I'm aware of is if you're using the "N" edition of Windows that was made to comply with certain European market regulations.
EDIT: That being said, I'm not sure that the scene you refer to is even one where a video is being played. I'll run the game again a bit later so as to refresh my memory.
EDIT #2: I just played through the first 5 minutes of the game and understand what you are saying now. Indeed, this is not a point at which any FMV is involved. As you say, it's pretty unusual. The game uses Direct3D 9 to do the rendering. Not only is Direct3D 9 a mature API, so should most GPU drivers be in view of it at this point. There are a few settings that can be adjusted by running the "config.exe" executable, though I suspect that they won't help you.
In your case, what might be worth trying is to use a Direct3D wrapper that interprets Direct3D 9 API calls and translates them to a different API, the idea being that it might simply sidestep whatever bug you are running into. One wrapper worth trying is dgVoodoo2. This is well known for being able to emulate the 3DFX Voodoo series of graphics cards but it's also capable of translating from older versions of Direct3D - including 9 - to Direct3D 11. At the bare minimum, to get it working, you'll need to extract the "D3D9.dll" file from the dgVoodoo2 distribution archive and drop it into the same folder that contains the "ys1plus.exe" executable. Then, when you next launch Ys I, it should use the wrapper. Indeed, you'll know if it's working because the wrapper displays a watermark by default. You can drop in a configuration file to get rid of the watermark, but I'd suggest confirming whether it helps to address your issue before bothering.
Another interesting wrapper is DXVK, which is capable of converting Direct3D 9 to Vulkan. This is officially intended as a compatibility tool for Linux users running Proton but it does actually work with Windows as well - it's just not offiically supported in that capacity. If you do a little searching, you should be able to find some user guides (especially at Reddit). The basic idea is exactly the same: extract the "D3D9.dll" file that implements the wrapper and drop it into the folder where the game is installed.
