Theres a few weddings and other videos on my windows 7 machine that I have as a .wmv for a few years now. I notice when playing them (both windows media player and editor) that some parts of the video artifacts appear. Here is a screenshot of what I am talking about.

Why is this happening? WMV format bad? Or files erode over time? Is mp4 a great format to use?

Looks like digitizing problems; when you capture a defective digital tape you may see these. If the file was OK on an earlier computer, it might have been damaged when you transferred it to the new computer.