IIRC, your card should support DXVA to a certain degree, not full H264 and VC1 decoding in HW like ATI HD series card (except the HD2900) or full H264 and partial VC1 like nvidia 8xxx series. To check which mode of DXVA your card support use this
http://bluesky23.hp.infoseek.co.jp/index.html#DXVACheck.... The site is in Japanese but you should figure it out that you need .NET 3.0 (XP) or VC2005 SP1 runtime (Vista). There's a free DXVA H264 decoder being developed here
http://forum.doom9.org/showthread.php?t=123537&page=44 (get it in the first post of the page there or the mirror down below) as an internal filter of MPC-HC (a clone of Windows Media Player 6.4 but with a load more features). You need to use VMR9 (either mode) or Overlay Mixer in XP in order to enable DXVA, for Vista you have to use EVR (either mode). Sadly this H264 DXVA decoder only works with HW bitstream-based decoder (ATI HD series except 2900 and Geforce 8xxx series except the old G80 8800) so your card is not supported.
On final note: Not all H264 files (particularly files encoded with profile higher than level 4.1 like most x264 anime fansubs around nowaday) will NOT work with DXVA1/2 acceleration: green image on Vista or black screen on XP, partial working like wrong frame rates or macroblock every fast moving scene or around edges, some files will even crash your graphic driver or even shoot down your entire system (likely to happen more on XP as Vista has a more robust graphic driver architecture). So in the end to me the best bet now is to buy a good enough processor for your need and use a decent software based decoder if you're a hardcore movie and video viewer. The best software H264 decoder currently IMO is the one comes with Nero suit but you have to buy their suit and an additional plugin, pretty expensive. Better just buy a good processor and use ffdshow-tryout, it has multi-threading now, not as efficient as Nero decoder but good enough with powerful proccessor.
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Do i need to set something in the drivers or in the player in order to enable hardware aceleration and play de video properly?
You need an DXVA enabled graphic card, a media player that supports DXVA output (Cyberlink PowerDVD Ultra, WinDVD, the one above I mentioned), a DXVA enabled decoder (the ones come with the above player I mentioned) and files that work with DXVA. This is the most tedious requirement as not all files are made by yourself and not compatible with HW decoder (both DXVA and blu-ray/hdhvd player). All files come from blu-ray and hd-dvd will work, files encoded for PC and played on PC then up to heaven.
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Also, i have a old pc in my livingroom with windows media center, its a old pentium 4 at 2.4 ghz and a geforce 4 mx 440 128 mb. Whats the most inexpensive video card i could replace with the old gf4 mx in order to view high resolution videos?
At least a Geforce 8500GT or a HD2600 pro (the HD2400 and geforce 8400 sometimes chokes with 1080p/i high bitrate video). A Geforce 7300GT IIRC has partial DXVA acceleration too, like its stronger brother 7900GT.