Hi, the videos are sd. They could be up to an hour in length. The projector is a Sony Native resolution 1280 x 800 x 3 . It has a HMDI input means the VPL-EW5 is HD ready, so I might use HD but its not that important at the moment.
Thje video will be played from a laptop.

Could anyone advise me on video format, I've read about several and not surprisingly they all claim to be the best and the choice is leaving me unsure. I have three things to do.Could you tell me If my choices are the best.

The "best" depends on the specific circumstances of it's use. Some might say the "best" car is a Rolls Royce .. others might say it's a Hummer .. others a Prius .. it all depends.

1. Special effects projected onto the background for a play. I thought I would use AVI and Lagarith since it takes up very little space.

For something like this the main consideration would be *quality* not how much space it takes up.

2.Animation and effects with good sound (5.1) for computer or Video. I have no idea what would be best.

Neither would I.

3.Home videos to send to family for viewing on video.

Depends on how long the video is, and if they & you have broadband (and how fast that broadband is) You could upload the video to a web site and have them view it from there. You can make YouTube videos private so only certain folks can view them.

For live video (as in real scenes shot with a camera) i'd use DV as this is the best for motion with a relatively easy-to-play file format.

For graphics & animation i'd go for MPEG2 with an extremely high bitrate, like 25Mbps or higher, as this preserves color details better than DV. On the other hand, i've you've already rendered to DV at some point and are working from these DV files, then converting to MPEG from there would be going downhill; stick with DV.

Both of these suggestions are based on playing the video directly from the laptop. If you were to play from a DVD then MPEG2 at 8.5Mbps would probably be the best choice.