Just received a note from a Media Center enthusiast in Germany advising that the Xbox360 50mhz HD issue has now been resolved following the release of Vista update 950125.
The problems which have been addressed occurred when using an Xbox 360 console as an extender for Vista Media Center.
• This update addresses a picture quality issue that occurs when you use Media Center Extender on an Xbox 360 console that has a High-Definition Multimedia Interface (HDMI) connector to the TV for video and a Sony/Philips Digital Interface Format (S/PDIF) connection to the audio device for audio.
• This update addresses an issue in which the Media Center Extender stops responding (hangs) when you play a large non-WMV video over an HTTP session.
• This update provides support for 50Hz output together with better quality for HD models. This feature applies primarily to regions that use the PAL video standard.
See the full KB article & download links here -
http://support.microsoft.com/kb/950125
So here's some Vista WOW for you: >>>>>>>>>>
WOW!! This fix only took 1 year. 
The format for TV files is changing from DVR-MS to WTV (with the VMC update due out later in the year), so maybe WTV is still overscanned/masked, but DVR-MS is being treated like plain MPEG2? If you convert 10SD to a plain MPEG2 & then play it back in VMC, you see the white dots.
