The script looks fine to me.
Have you saved the script as a .avs ?
After saving it, you drag the script in to Virtual dub. If that still doesn't work
remux the file with mkvtoolnix and only keep the video stream. Remove the sub and audio from it.
A while ago i had a problem with some files myself to. I made this thread. Perhaps it has some useful information for you.
http://forums.animesuki.com/showthread.php?t=50200
The remuxing worked for me.
Also try test a other mkv/mp4 file and see if it works.