I have the same problem. Clean install of 7068 64-Bit version .ATI 3650 Video Card.
Changing the output setting in VLC to DirectX video has made a significant difference.Would prefer it if it didnt switch the Windows theme to basic, but I can live with that I guess.
I don`t know were we can report a bug, but this problem can be found on Windows XP SP3 too. (I`ve heard that there are some people who have had this problem on Windows Vista, but they fixed it with a video driver update)
Guess what....I changed my driver with the original on the CD (ATI 8.450.0.0) and all works as it should.
I`ve tried 9.4,9.3 and doen`t work , i will try newer versions because the driver on the cd is created in 2007 and i will find a newer one.
But the solution for the moment is to change the driver to an old one.
I personaly inspected 4 different installations of Windows 7 RC with different hardware configurations and no external codecs installed, the WMP and VLC have the same poor video quality. The bad part is that even the online videos and videos in the games looks poor
I have but I use the desktop PC mainly for games, and heard that the graphics in W7 have some changes. Also some gamers experience driver install freez and game hangs with Vista graphics drivers! I will wait for nvidia to release un updated driver 'couse the ones that I have (185.85) works perfectly (for games)
I have a Nvidia 9800 GTX+, installed new drivers that claim to be Windows 7 compatible.
The picture gets better when I use Direct X or Windows GDI output, but still not as good as XP.
I think this must be a problem with the codec compatibility with windows 7. OR Microsoft has intentionally made video playback poor quality with the Beta and RC releases so that you have to buy Windows 7 when it is released!! If so they should have said!!! I will buy when it is released although am a bit angry now that I have to wait until then!
i confirm that the same issue is in 7600 (RTM) version, and only switching to dx mode will get some improvments in picture quality, I've trying it with all possible configurations on fresh instalation with newest drivers (190.38_desktop_win7_winvista_64bit_english_whql) this problem still remaning the perfect picture quality is only in native video resolution if you try to resize it even a bit you will get those ugly pixels... so if anyone find permanent solution to this let us know
I'm not sure I'm having exactly the same issues as everyone else, but it looks pretty close. I have the RTM of vista ultimate as well, and definitely everything has absolutely horrible video playback, except, for some reason, that windows media player seems to have perfectly fine video output. If I take a screenshot of windows media player's output, and apply a "pixelize" filter, then I get the output of all other media players. This applies to slingplayer et al as well.
One other interesting thing I've noticed in trying to figure this weirdness out: all players except windows media player are able to function after I change display drivers without rebooting. If I run WMP, it gives me a BSOD that says the driver entered an infinite loop and restarts.
Though it seems to span all builds and versions, for the record I'm running the 64-bit version of 7 ultimate and have a radeonHD 3470 crossfired w/ an a7da-s (790GX - HD3300 integrated) board. Right now I have the vista drivers 1 gen back installed, but I've tried the most current of those and of the windows 7 drivers as well with no joy, and will probably try a few older ones just for "fun".
Sadly i have had problems with movies in full screen showing pixel crap stuff instead of "bluring" it out or what you should call it, i use dell studio xps with win 7 enterprise.
Just for fun of it after google stuff on the net for hours and tried diffrent condec and stuff, i just turned off aero... and wtf do you think happends to the movie/video at full screen? looks like it should with out the pixel crap enjoy for now.