It's not a huge issue, but for your own edification, (partial) hardware MPEG-2 decoding has been on graphics chipsets for a long time. I doubt that's the main reason why Microsoft doesn't support most older GPUs in MCE 2005.
The first mainstream GPU to offer Hardware DVD decoding support was probably the ATI Rage series of chips (such as the Rage Pro Turbo, also known as the 3D Rage Pro, which is the graphics unit integrated into my K6-2 mobo). This early ATI chipset supports Hardware Motion Compensation (HMC), while the later Rage 128 and anything Radeon to this present day supports both HMC and iDCT. Barring the TNT/TNT2 graphics cards, Nvidia has had HMC MPEG-2 decoding in its GPU since the Geforce 256, (although hardware iDCT MPEG-2 decoding didn't come until the Geforce4 MX, which ironically had more advanced MPEG-2 decoding features than the Geforce4 Ti series).
Taken from Wikipedia:
In motion-video applications, the GeForce4 MX did offer new functionality. The GeForce4 MX (and not the GeForce4 Ti) was the first GeForce member to feature the VPE (video processing engine.) The GeForce4 MX was the first GeForce to offer hardware-iDCT and VLC (variable length code) decoding, making VPE a major upgrade from NVIDIA’s previous HDVP. In the application of MPEG-2 playback, VPE could finally compete head-to-head with ATI's outstanding video-engine.
Probably the first modern IGP (as in the type of integrated graphics known today, that has the GPU built into the northbridge chipset and uses system memory as video memory, and not the "integrated graphics" of yesteryear, such as my Rage Pro Turbo IGP which is essentially a graphics card built into the motherboard) to support MPEG-2 decoding (in the form of HMC) was Intel's Extreme Graphics found on the i810/i815 chipsets. Intel's Extreme Graphics 2, found on the i845/i865 desktop chipsets also supports hardware MPEG-2 decoding in the form of HMC only. Intel didn't implement hardware iDCT support into its IGP solutions until last year with its GMA 950 (not even the GMA 900 supported iDCT).
Here's a nice link talking about DVD playback and GPUs, circa 2000:
http://www.ecuadors.net/pcdvd/dvdplay.htm
The problem here is that Microsoft's MCE 2005 only works with certain graphics cards, and those on the "official" hardware list, with the exception of the mx 4000, are all Directx 9 cards,
http://oem.microsoft.com/downloads/MCEReadinessCenter/MCE_Approved_Components_for_MOSB.xls
The Geforce4 MX 420/440/460 cannot be found on this list, but since they're basically the same as the MX 4000 (NV17 and NV18 cores are almost identical), they work, and many OEM MCE 2005 boxes shipped out with MX440 cards. Keep in mind that the MX series is only Directx 7 capable. The oldest ATI card on the list is the 9550/9600. The 9250/9200/9000/8500 should also work with Omega drivers (the latest Catalyst drivers may offer MCE support for these cards now, IDK). The original Radeon/Radeon 7000 (aka VE) are not supported, despite having full hardware MPEG-2 decoding abilities.
The fact that Intel's Extreme Graphics 2, which only has HMC, is supported by Windows Media Center while ATI's Radeon 7000, which has HMC and iDCT, is not doesn't make much sense to me. Obviously the amount of hardware decoding isn't the issue. Directx 9 capabilities don't seem to be the problem either, despite what is mentioned on numerous other websites. The ability of Intel's Extreme Graphics 2 IGP and the Geforce4 MX 440 (both Dx7) to run MCE 2005 completely disproves the Directx9-only theory. The simple truth is that MCE 2005 discriminates certain graphics cards for what appears to be no apparent reason. MCE 2005 even checks to make sure your graphics card has at least 64MB of graphics memory, which is absurd, seeing as how MCE 2005 is 99% a 2-D application, video memory should have little impact on its ability to function. Further evidence to discredit the need for 64MB or more video memory in MCE 2005 can be found by examining the ram usage of Intel's Extreme Graphics 2 IGP when running the MCE application. The IGP uses 40MB of system ram when running MCE (I have an i865G mobo on my MCE 2005 machine, so for Ss & Gs I decided to try out the IGP). When just viewing the desktop at 1024x768 resolution and 32bit color, the IGP will pull out 8MB of system ram, which is much more than is needed, so the IGP definitely takes extra graphics memory as some sort of buffer. This means that MCE itself should in fact run fine with just a 32MB graphics card, and I wouldn't be surprised if a 16MB card such as a Rage 128 wouldn't completely satisfy MCE 2005 if it wasn't for the bogus video card discrimination.
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