It depends here is what microsoft says about the issue
f you are running the Windows Vista Home Basic, Windows Vista Business, Windows Vista Enterprise, or Windows XP operating system on your computer, you might need to install a compatible DVD decoder (also known as a MPEG-2 decoder) before continuing with the following activities.
*
Playing a DVD
*
Playing a recorded TV show
*
Playing video files that were encoded with the MPEG-2 codec (.mpeg, .mpg, and some .avi files)
To purchase a compatible DVD decoder, visit Plug-ins for Windows Media Player.
******************************************************
Edit: I would re-install the ATI software for sure. Then if you still have probs with the games let me know I am pretty good at ATI problem shooting