i would think the problem is that the video is being projected full screen and its only 640x480 open a picture file thats 640x480 then blow it up to full screen it becomes pixelated. I would think the same thing is happening here. try to make the video a higher resolution or the same as your screen size. I havent had any problems playing movie files. When you run your game at 640x480 does it look messed up? if no then that is most likley your problem.