Low quality color when playing DVD or Video files (Codec)

Archived from groups: microsoft.public.windowsxp.help_and_support (More info?)

Issue:
When playing DVD or Video files, they look like they are at 8-bit color
range instead of 32-bit.
Hardware:
P4 2.6 Ghz; 1GB PC 3200 RAM; XP SP2; Nvidia GeForce FX 5600 256MB; Monitor
Optiquest Q71; Screen Resolution 1024x768 32 bit color; DirectX 9.0c;
SoundBlaster Audigy2 SZ
Software:
I upodated all drivers (Monitor; Video card; Sound card) and all updates
from windows are installed.

I am using an external Memorex Double Layer 16x to watch the DVDs. This
software comes with Nero Suite 6. I have reinstalled to no avail. The only
other thing I was thinking are the codecs. I installed DviX, 3ivx, Qicktime,
Windows Media Player 10. Any suggestions?