First, if you haven't read the radeonhd wiki that's a good place to start :
Second, looks like you are running with XAA acceleration which is good for normal use but not so good for video. Running with shadowfb acceleration seems to work better for most people. I forget the exact option syntax but try the following in your Device section :
Option "AccelMethod" "ShadowFB"
(EDIT - added capitalization to ShadowFB, not sure if it matters)
Once you have that working, if you feel brave enough to learn git and build drivers from source, the "quick and dirty 2d" branch of radeonhd includes full EXA and Textured Video (Xv) acceleration which will give you even better video playback, but you will need to invest a bunch of time learning new things. You will also need to download, build and install the "drm" driver, ie the kernel driver for graphics.
Last edited by bridgman; 07-06-2008 at 06:32 PM.