I've had some experience with video encoding/decoding but i haven't been able to find a solution to this particular problem.

Diagonal edges in video appear "stepped" sort of like playing a 3D game without any Anti Aliasing. There is also more blocking than normal but that is a relatively minor problem which i believe will be fixed along with the stepped-diagonal problem (and if not, the deblocking filter can be enabled).

I would show a screencap of the problem, but when i take a cap, the resulting picture is rendered correctly, without the problem. Played in normal video players (BSplayer, Windows Media Player, Winamp) all give the same problem. Running the video in VirtualDub fixes the problem though.

I've tried tweaking the FOURCC's (though had a minimal knowledge of what i was doing, i only knew enough to not break anything :P ), different combinations of installing the codecs.

From the way the problem appears it seems like interlacing as the stepping is regular rather than based on the slope like my previoius antialiasing example, but since the video shows up correctly otherwise, it's not an interlacing issue. I also know it's not a Aspect Ratio problem since i've modified the ratio and the problem always remains.

It really bothers me to have nicely encoded video that could look really nice but instead some sort of misconfiguration undoes all the fancy encoding and makes it look like crap -_-;

i haven't used a video program in over 5 years. x_x;

.........k guess not.