Watching high-definition (HD) video on an under-powered computer results in skipped frames as the computer is not able to process all the data and the video output gets jittery becoming unwatchable, I faced the similar problem and to my surprise simply changing the video player software provided the solution.
While hunting for a solution to play smooth HD video on my PC I found excellent media player software - Splash Lite, marketed as the next generation media-player the software do provide unparalleled features like advanced picture post-processing engine, simplistic user-interface, fast, smooth and jitter free video playback without requiring any additional codec.