When I select GPU Acceleration, I have no problems playing DVD's and AVi's (Divx and Xvid format). edit, just tested an flv format file and that plays fine too.
It's only when I play HD format (h264 and AVC) codec files (MP4 and MKV wrappers) that I have problems.
The video stream is badly broken. I cannot tell if it's playing at a very low framerate (which seems to be the problem in mp4/AVC files) or just major pixelation (h264/MKV.)
With the MKV files, most of the time it looks like the moving parts of several sequential frames are smeared together. Static images tend to be either pixelated or remain on screen well after they're meant to.
All files play fine with gpu acceleration turned off. BTW: Tried turning off the overclock on the GPU with no effect on the problem.
AMD x2 5600, Ati hd4770 (overclocked), Vista 64hp sp3 (please hurry with the 64bit betas), 4GB ram, java 1.7beta.