Choppy video only when navigation menu goes away?

I am setting up my Vista Ultimate x64 MC, and everything was going along well. Phenom Processor, 4gig ram, ATI 3870 512mb HT card, and hooked up to a 57" 1080p TV. Started copying some movies over to MC, and went to play them back only to discover that whenever the media center navigation menu leaves the screen, the video playback becomes ultra choppy. If you move the mouse or press a button on the remote and the menu comes back up, the video is fine.

Thinking that it might be a problem with the copied video files, I tried running the setup videos that are included with MC only to find that the same situation occurred. Any thoughts on this? Audio quality is not effected, just the video playback...

A few more details, as I go through trial and error. The video problems are not limited to just the copied DVD image files. I put a regular DVD in and experienced the same problem. As soon as the MC navigation menu goes away, the video becomes choppy. If you bring the menu back up, it fixes itself and will play fine until the menu goes away again.

I have tried changing resolutions, with no the same results. Any help?