I'm using WMC7 and an HD6450 video card. I just looked at my CCC settings again & checked the brightness or black levels using the WMC test patterns.
I use YCbCr 4:4:4 Pixel Format (which is supposed to be limited) and Dynamic Range is set to 16-235. Enforce Smooth Video Playback is checked & this also grays out several settings including the Dynamic Range.
The first 3 Pixel Formats are limited range & only the last one labeled RGB Full is full range.
My experience is that a few different combinations of Pixel Formats & Dynamic Range will look proper, but you may need to recalibrate your TV depending on what you do. My HDTV has only one HDMI input & I use an external switcher. I wanted the HTPC to match the other components. So I could not calibrate different inputs because there was only one.
WMC uses 16-235 limited range & this looked OK before I installed the video card. With the HD6450 blacks looked washed out because the card's default setting also used 16-235 color & I was getting a double conversion. There is a simple registry hack to change WMC to use 0-255 full color. I did this so that all my components & sources looked the same.
I had presumed, until today, that since checking Enforce Smooth Video Playback grays out the Dynamic Range that it did not matter what the DR was set to before it was grayed out. IOW if it's disabled then what choices would you have. But as I was playing with the DR today & looking closely at the sample image in CCC of the girl with the flowers & fruit, there were some subtle differences. So I did a screen print of all 4 combinations: Enforce Smooth Video Playback enable with limited & full DR, and Enforce Smooth Video Playback turned off with limited & full DR. Doing some pixel peeping with Photoshop Elements, the 16-235 DR with Enforce Smooth Video Playback turned off was the only combo that indeed had a limited range. Turning on Enforce Smooth Video Playback actually changed the 16-235 to 0-255 (or very close to it). And 16-235 DR with Enforce Smooth Video Playback turned off also displayed washed out colors in the WMC setup test image.
Initially I thought that 0-255 DR with Enforce Smooth Video Playback turned on looked slightly better than 16-235 with Enforce Smooth Video Playback turned on, even though DR is grayed out in both instances. But the more I look at the screen print pictures the more they look the same. And they probably are which is why DR is grayed out in the first place.
WMP behaves differently than WMC. WMP (and others) use 0-255 color by default vs WMC 16-235. Your player could make a difference & you may have to try a few things until it looks proper.