The avi is messed up, someone encoded telecined content without applying ivtc into a format that does not support interlacing (MPEG-4 ASP). Which causes tons of ghosting, etc. .
Also, it shows tons of compression artifacts due to bit rate starving.
Throwing TFM(), MCTemporalDenoise(settings="very high"), BasicVSR++, some luma sharpening and line darkening at it, produces a somewhat decent output. (but in case there were fine details somewhere, they are probably gone;
script)
Didn't look at the mkv file.
Side note: Adding a white space before the last dot in a file name is just evil.
Cu Selur