I believe I've had similar problems with PowerDVD, in my case there would be a whole lot of macroblocks showing up on the screen, especially in dark scenes. Turns out that it was because I updated some drivers for my motherboard (took me quite a while to figure that one out). The point is that it's probably not the fault of PowerDVD. You say you recently got a new LCD monitor - were you using a CRT before? I would try to see if you could duplicate the effect with another software player (try Media Player Classic, it's free and has built-in DVD decoding), as well as see if the problem is still there when you use the old monitor (if it's still available).
Some of that is going to be caused by your monitor, LCDs do not have the same color depth as a CRT and certain things like that is noticeable on them, its more noticeable on brighter things however at least in my experience. Some of that is caused by the vivid setting too as it ups the brightness considerably on the image. Try it on normal and see what happens.
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I also experince the same problem with PowerDVD5 and a CRT monitor. Media Player Classic also behaves the same way with VMR7/9 renderless, but everuthing is right with VMR7 windowed or overlay mixer modes.
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mpc is using the powerdvd codec in its rendering. More than likely the normal image. Try setting a custom profile so that at least you can get it close to vivid but not with the same problems.
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If you stick with it long enough, you'll find out that despite being free, Media Player Classic is quite a bit more advanced than old expensive PowerDVD. That being said, you need to check if you are using PowerDVD's filters when you are playing back in MPC (since MPC has built-in DVD decoding). Start up a dvd, then right click on the screen- you should be able to see a list of which filters are currently being used to playback. If you are using PowerDVD's decoders, I think you can set the vivid profile stuff in PowerDVD first, then load up the dvd in MPC. If you are using MPC's decoder and want to use PowerDVD's, hunt through the options and uncheck all built-in MPEG decoders. If you prefer MPC's decoder for some reason, maybe you want to try using ffdshow as part of your filterchain to replace Vivid profile stuff (ffdshow can adjust levels and other picture properties, as well as sharpen, etc). If you are unsure how to do this, check out this thread from the avs forum.
Hmmm... I actually don't want to change the Filter it uses, if I don't have to (it does not use PowerDVD's one)... All I need are settings for brightness, contrast and saturation... Now, maybe I'm blind, but: Where can I set this stuff???? (In MPC)