Video Driver-Dell PowerEdge SC420

Windows XP Pro SP2. The Dell site does not have XP Pro drivers, so I used the 2003 driver via the 'have disk' method, and the driver installed. I can adjust the resolution and for the most part, the video is OK. However, when I try to watch a DVD movie using ANY media player, I get a "Create Overlay Failed" error (from WinDVD), Nero Showtime reports "the application requires Direct Draw Acceleration which is not enabled" and it goes on to explain how to enable it in dxdiag.exe. But when I go there, the Direct Draw is greyed out and listed as 'unavailble'. So I went to Intel and downloaded a video driver for the e7221 video chipset from this link. It clearly states in the description that it will run with XP Pro, but when I launch the setup, I get a "this operating system is not supported" error. I have installed the chipset drivers, and tried several other workarounds (including the GMA900 video driver which is the wrong one even though Everest Ultimate Edition reports it as being on the PC with the e7221). So, I'm at a loss for now. Any help will be appreciated. Thanks.

Specs:
Clean install of XP Pro SP2 (formatted yesterday); 250gb SATA2 HD; 20x DVDRW SATA; 2gb DDR2-800; Intel Prescott HT 2.80ghz; on board video Intel e7221; Creative SoundBlaster Live! PCI sound card.

UPDATE- I just tried using VLC for DVD playback, and it worked, but the picture quality wasn't that great; for example: curves weren't smooth and were fairly jagged, and in general the whole DVD playback wasn't smooth and was kind of jumpy or stuttering)