Our digital signage vendor recently sold us 20 odd mediaBOX-300's for a video playback application. We were extremely unhappy with the playback quality, with constant screen tearing and jutter artifacts. I tested installing updated Intel drivers, changing every settings I could find and testing different codecs. Even just watching youtube in IE or chrome exhibited the same issues.
Ultimately I found that the Windows 7 Embdedded image from digitalsignage.com was preconfigured to use the Windows Classic theme. Which disables Aero. Which disabled WDDM and DMW. Which disabled DXGI 1.1, DXVA-HD DDI, Hardware video overlay, etc, etc, etc...
Once I switched to a standard Windows 7 "Aero" theme the video playback issues were IMMEDITELY resolved. Why did these devices ship this way? Why was this not caught before shipping that WE7 image?
So if anyone else has noticed- try changing to an Aero theme. And if you haven't noticed, I still recommend switching to an Aero theme and see what real video playback is supposed to look like.