I have been messing about with various tools to try and make Media Player work well in VGA mode. I managed to get a reasonable job done but the file sizes were a tad large and the video quality was "jumpy".
I finally did what everyone on this forum says which is to try DIVX with Betaplayer. I bought the DIVX Pro version for 30% better compression / quality - it only cost £13! I use RiverPast's Video Cleaner (appx $30) to do the conversion with a LAME audio encoder (Free).
All I can say IS WOW!!!!!!!!! Its like HDTV in your pocket!
I sincerely think you should ditch Media Player immediately for video viewing!

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Anything I say will probably be stupid so ignore it anyway