Some one please clarify this for me!
Do I need to know html before learning xhtml and which one is easier to learn?
Can xhtml alone create a dynamic animated web page?

You don't need to learn html before xhtml; it might be better not to. They're very similar, but the rules have changed a bit. Not learning sloppy code that was allowed in the past might be helpful.

Either one can be used to point to an animated gif or a flash movie, but anything more dynamic than that requires server side coding.

Myself I'd suggest to not use XHTML, but that's just a personal preference and is only based on the fact that HTML5 not XHTML2 is what is being worked on.

But HTML 5 is so many years away it's not even funny.
You could learn proper HTML - just use the STRICT Doctype. The differences between HTML and XHTML are minimal really.

Can xhtml alone create a dynamic animated web page?

No. ...

You shouldn't use animated webpage at all though - unless the user turns it on himself -, it's against accessibilty cuz it distracts you while reading. Learn xhtml, it is like html but your code is more correct and logic.