I run across this problem sometimes on videos I've pulled off the internet. I don't think a specific codec is causing it because I've seen the problem on AVI files, Youtube streams, and WMV files.
I don't even know how to explain it. The video does not launch in full screen, only in a portion of the top lefthand corner of the screen and looks terribly interlaced with strobing.
This is an old Christmas program I pulled from Youtube. No conversion has been done to the file. I can pull a codecinfo on it if thats helpful