CPU is most certainly the main issue here. It is with 80% of choppy DivX ;-) playback problems.
Some tips:
1. Goto MP3 decoder settings, get it to halve quality, tweak it. Could REALLY help. Especially if the audio track was encoded at a high bitrate.
2. Make sure your not multitasking.
3. If you're not running the movie at 100%, than obviously you would want to view it at 640*480. Isn't that obvious?
4. You may want to try those WMP replacements that hog less CPU resources - might just help.
5. If all else fails, and you just want to see your movie, you can use Norton WinCommander, F3 view command, and view it at 90-95% the speed. You'll see more of the frame and it'll be less choppy, if you can stand watching your movies at a slower speed.
6. Defrag\tweak RAM or swap file settings only if the symptoms indicate that it isn't the CPU that's causing the problem.
7. Another thing that seems to me it would go without saying: Run the movies at 100%, or the closest alternative. Streching does cost some CPU power.
8. When you've really exhausted every other option, you can re-compress the audio track in VirtualDub. It'll sound like poo, but you may get your movie going very smoothly using this method.
And, finally, I'd like all of you to know that I've used my lil' 200MMX box here to view 700KBPS DivX ;-) movies almost without any skips at all.
I hope I've helped someone.