HTPC - video issues

[Craig-Rogers]

OK...just got my very first PC built. Two days of trying to get my X-Fi XtremeMusic sound card to work, we finally ripped it out, and are running optical directly off the mb (Intel D975X BX2) into the receiver. Sounds GREAT.

With great anticipation, I put in my very first Blu-Ray disc ('Kingdom of Heaven'). The big red FBI warning was the biggest, sharpest, clearest I've ever seen! Wow. Then the "play", "setup", and various other menu buttons came up, but they were almost translucent with the same red FBI background. ??? Rather strange bug, but regardless, we charged forward, and clicked 'play'.

The 20th Century Fox logo comes up, again, big and bright - impressive, but I did notice obvious aliasing on the edge of the logo. Is that normal? I was hoping for virtually alias free images with 1080p Blu-Ray. Is that expecting too much? (<- legit question, I'm not being sarcastic)

Then the movie starts...again wow. The falling snow looked almost three dimensional. Very, very impressive! But (yeah, another 'but'), whenever the image pans or moves the image stutters. Not horribly, but it's noticable, and rather distracting. It's not ghosting, but rather seems to be almost skipping frames.

I spared few expenses when building this machine, so I'm wondering why I'm having trouble playing back Blu-Ray.

Here's my specs...any ideas what I can do to resolve these issues? I'm guessing it's something easy, that I just don't know about.

Thanks in advance.

motherboard: Intel D975X-BX2
cpu: Intel Core2Duo E6600
RAM: 2GB Corsair XMS DDR2
HD: Western Digital 500GB
Video: EVGA Nvidia 8800 GTS
TV: Sony KDS-60A2000

DVI to HDMI cable connection between video card and TV
Playing back Blu-Ray with the PowerDVD 6.6 BD (came with the blu-ray drive). Is it worth the $99 to step up to version 7.0? Is there something better than PowerDVD?

Thanks!