I have tried to reproduce your problem on my system and I have been unable to - it works perfectly for me. I do not think that your problem is a MediaPortal problem - do you have the latest version of the DivX decoder, the latest video card drivers, a fully up-to-date Windows XP (all patches and updates) .... etc.? In particular, there has been an issue with Quartz.dll - check that Microsoft's support page, or do a search for posts about Quartz.dll here. Here is one issue involving Quartz.dll.
I would guess that the reason you are getting no replies is that no one else has experienced a similar issue, so we are out of suggestions. I think you need to do some more testing and checking to see if you can find the cause - it is something that is peculiar to your system ...
I started reinstalling, deinstalling, and installing different decoders, such as divx, xvid, etc., and it appears that divx was the problem. For some reason, divx was taking the up down left right controls away from media portal for its own uses, as far as i can tell.
I didn't suspect divx at first because, as you mentioned, other people use it without trouble.
Oh well, at least now it is fixed.