Radeon X1300 and Inspiron 530s graphics problem

I have just setup my new Dell Inspiron 530s.
On booting I noticed the DELL Logo and the subsequent XP Pro logo had lines on them as if captured in a fishing net.
In Windows graphics appeared normal until I play a video in WMP or play a DVD using PowerDVD - then there is serious blocking and lining as you can see on the above screenshot of a useless download I attempted to fix the problem.
So far by turning down video acceleration in WMP I can get a usable but small almost unblemished picture.
I have downloaded WMP v11
I have updated drivers from ATI for the Radeon x1300Pro card
Done all Windows Updates
Reinstalled Monitor Drivers
Can anyone suggest anything else before I attempt to spend hours on the phone with Dell?!
Dell Inspiron 530s
ATI Radeon X1300pro 256MB
Windows XP Pro
Dell E207WFP Monitor
Some system info:
Graphics Card Manufacturer Powered by ATI 
Graphics Chipset Radeon X1300/X1550 Series 
Device ID 7183 
Vendor 1002 
Subsystem ID 0D02 
Subsystem Vendor ID 1028 
Bus Type PCI Express 
Current Bus Setting PCI Express x16 
BIOS Version 
BIOS Part Number 113-A92402-103 
BIOS Date 2006/10/16 
Memory Size 256 MB 
Memory Type DDR2 
Core Clock in MHz 594 MHz 
Memory Clock in MHz 396 MHz 
Primary Display Yes 
And more:
Driver Packaging Version 8.442-071204a1-055811C-ATI 
Catalyst® Version 07.12 
Provider ATI Technologies Inc. 
2D Driver Version 
2D Driver File Path System/CurrentControlSet/Control/Video/{E9A61A57-6187-4C8A-8B5D-63374073D7E2}/0000 
Direct3D Version 
OpenGL Version 
Catalyst® Control Center Version 2007.1205.1451.26462 
Many thanks
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