Color Fragments on DVD playback?

I'm testing the HTPC waters with some existing equipment I have.

I freshly installed Windows XP on a computer I had. It's got a Radeon 9800 PRO for the Video Card. I tested a DiVX trailer that I downloaded and it looked beautifully. It stuttered slightly, but that's probably due to the age of the machine. My eventual HTPC will have newer parts.

However, with DVD playback in both CyberDVD and TheaterTek, I get colored lines and fragments all over the screen. I tried both the "Hero" DVD and the "Transformers" DVD and they both gave me these colored lines and boxes. I remember them being particularly green in Transformers and slightly blue in Hero. And it's not minor. It's VERY noticeable. To the point where watching a DVD would be pointless. Playing other videos and regular Windows stuff does not give me these lines.

What could be causing this?

I've tried it hooked up to my TV via a DVI cable, and hooked to a regular monitor via VGA. Happens under both circumstances.

I believe so. I downloaded the latest "Catalyst Software Suite". It said that the Display Driver was included in the package.

You can view what it says:
http://game.amd.com/us-en/drivers_ca...=xp/radeonx-xp