Thats sounds like a real PITA.
I have XP installed, but have rolled back to SP1 (Via Format and reinstall, etc) because of similar problems.
I didn't just get problems with Video though, my wireless Lan Died, DVD writer stopped writting to CD's (although it worked ok with DVD's - Go figure).
It gets my goat that M$ screw up peoples systems like this.
However it also irritates me when other companies don't release updates that should fix these kind of issues.
Simple Maths - XP SP2 - Millions of people will install, after that - a lot of them get stuff without doing anything.
Given the number of people with this setup, anyone who wants to achieve a mass market penetration should keep an eye on what the update to the OS on which they run, do.
My .2C (or .0000002 Pence at the moment

- Kidding)
Cheers
Mark