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You should create a single publishing point that provides access to video files on demand. This will enable users to select which videos they want to view and to pause or fast-forward the content during playback.
Because the users have Active Directory accounts, you should enable WMS NTFS ACL Authorization. For ease of administration, you can place students in groups based on their class enrollments. You can then apply file system permissions to specify which files are accessible to which users.
You can use wrapper advertisements to play a video clip automatically before the playback of specific videos. This is the easiest method because it does not involve the manual creation of individual playlists.