There is a long-standing bug in Mac OS X 10.6 and later which causes video screensavers to exit immediately. This problem affects all screensavers, not just iScreensaver and it is truly a bug in the OS.
There is a workaround: re-export your video file in another codec. If it is H.264 then re-exporting as H.264 again will usually fix the issue. You can also try other codecs such as PhotoJPEG (large file size, but very fast and low CPU usage).
