PC picture quality not as good a Blueray player.

What are the specs on the PC? This is very significant information.

Is the projector doing 1:1 pixel mapping from both sources?

The first things that come to mind in these situations is usually a scaling issue or a levels output mismatch.

VLC doesn't do the best image quality. On a small screen you won't notice as much as a big screen. Try the trial version of JRiver Media Center in Red October HQ mode. If it works to your satisfaction you can either buy the software, or set up a free player like MPC-HC or MPC-BE with the same codecs/filters (LAV filters and MadVR). The important thing is to try a directshow player and see if that improves quality for you. JRiver is a free 14 or 30 day trial (I forget which) and automatically downloads, installs and configures the best free decoding components. I or others can help with setting it up. Almost everyone else can help with setting up MPC variants if you see a better image than VLC offers.
You may still find the standalone better, but I think it will be pretty close.

You really think jriver looks better ?

On a 61" or 120" screen? Yes.

I use MPC-HC + LAV + MadVR. Setup guide here: http://www.avsforum.com/t/1357375/advanced-mpc-hc-setup-guide

On my 120" screen I can't tell much difference between my PS3 and PC playing Blu-ray. If anything, I think my PC looks better

Yes I highly recommend Jrivers (+ turn on Red October feature)....so much easier to set up + highly stable software. If you like the picture quality you can later buy the software or install/ play with MPC-HC + Lav + MadVR. You should get the same result as JRivers.

I've spent lots of time experimenting with all the leading media streamers + software video players + bluray players and Madvr on the Jrivers/MPC-HC is very good,only so so so lightly behind in picture quality compared to the Oppo 93....this is on a new Epson 5010 projector + 120" screen.

Not being forced to watch previews and FBI warnings makes the effort worth while IMO.

Free:
$50 with occassional update fees:

Yes, at least two of us have said that JRiver isn't free, but it's the easiest to set up to get the best picture quality. That quality can arguably be matched by free software that will require more in-depth configuration. (I say arguably, because there is more the video experience than just LAV and MadVR, e.g. frame/refresh rate synching, and other reclock like features. At least with the JRiver trial you can see what the best results will be - free for many days - and then you can decide to match that as closely as possible with free software. The main purpose of recommending JRiver is that it's free to try AND will give you LAV/MadVR with no user-input to download, install and configure them. If there's an improvement over VLC, you can then invest the time (as opposed to $50 in money) to download the free software and components and set them up. JRiver is a complex suite of advanced media centre tools, so it is not for everyone for everyday use.

A wave? Like the top part of the picture is shifted or otherwise not lined up corectly with the bottom part of the picture? If so, that sounds like tearing.

That sounds like ringing.

What is the graphics unit of that laptop?

What part of the screen does the wave start on, which direction does it move and is it a straight line or curved and how wide is the line?

Here is what tearing looks liks like:
https://en.wikipedia.org/wiki/File:Tearing_%28simulated%29.jpg

I don't think it is ringing - ringing is when you have a high-contrast transition - like white to black and you get a sort of halo on both sides of the transition. Some people call it EE or Edge Ehancement when it really is just a side-effect of overly aggressive edge-enhancement (or extreme video compression).

See the first two pictures on this wikipedia article:
https://en.wikipedia.org/wiki/Ringing_artifacts

It is common for the tearing point to move - it is often an issue of mismatched timing between your video player software, the video card and the video display (not unlike when you are at a stop light and the cars in front of you have their turn signals on, but they are slightly different timing so they drift in and out of sync). It is not typically an issue of how fast a cpu or video card you have.

Try the MPC-HC player. It has settings that affect tearing, View (menu) -> Render Settings. Fiddle around with stuff in there if it doesn't work right out of the box.

Definitely sounds like tearing.

Are you running windows 7? Also, do you have aero enabled?

The tricky part is that it only happens when you are connected to the projector. It could be a mismatch in the refresh rate.

In any case, the LG CFI (creative frame interpolation) feature should be disabled if it is enabled.

I don't know why sourceforge is not responding.
But you can try videohelp.com - they keep copies of the latest and greatest video tools on their own site:

http://www.videohelp.com/tools/Media-Player-Classic-Home-Cinema

That's fine. Windows 8 may not use aero in the traditional windows 7 sense of glass panes and what not, but it's the same deal underneath it all i.e. it's all hardware accelerated.

Windows 7 without aero enabled produced a lot of tearing even with the EVR renderer.

So at least we can rule that out. Are you able to check on the refresh rates between pc and projector and compare them to what you get with your LCD tvs?