It is not solved. It is still choppy, but not as bad as before. I have upgraded to an 8400gt with 512M in one MD, and a 9400GT with 1G in another. They are all choppy and it doesn't matter what hardware accel I use. I am trying various things - wil update if I find the cause.
Also, mkv and m2ts are pretty much unwatchable. Very choppy and out of sync. I could watch m2ts all day before 810.