Can you try a 32bit OS and see if there is the same problems, that could test the hardware side
If so, see if catalyst in win 7 is set up for 720p (?)
I have an asus card and noticed that when asus splendid is running the picture is 'crapper' than on my 1080p tv (not connected to pc) for the same DVD.
http://www.codecguide.com/ has some win7 codecs
I'm doing a build very similar to yours right now, waiting on parts, but triple core
g'luck