I have an Acer Aspire One with MediaPortal, it can play up to 720p h264 smoothly, anything more is probably too much for the weedy Atom processor. Even 720p h264 can be a push at times. Since you didn't say what kind of files you were experiencing the "checkered screen" issue with, I can't say for sure, but I suspect you're trying to play something the machine simply can't handle decoding.