So to help everyone that have same problem with local, and none explained how, read

(thnx gosiah23 for the suggestion)
You will have to...uninstall the latest version (leave the files on ur webeserver) and then install 1.1 (overwrite the files) and then install 1.7 (press yes on the adminpc and overwrite again the files) and then use the localvideo:video tag. For example if the video is 4.flv, use localvideo:4.flv - And so on
Its been 128 pages, and none...none explain that simple fact

Hope it helps, take care !
Ps
The Addon author said to me recently that he doesnt going to reply in any message, so if a new modder could be found to continue it, will be major hit i believe.