VG is CPU intensive. THE GPU is not used to it's potential during playback , and most of the graphics Display relies on the CPU.
So even updating your graphics card isn't going to help much.
(the Screen Savers DO use the GPU, this is why the screen savers have always ran better. Most of the Video Display was offloaded to the GPU)
Adding RAM will help, as SA suggests, Especially turning off the Virtual Page file.
As Alerte showed, Uncheck the Streaming Box.
It does add a Delay between video clips, but it Loads the Whole Clip into Memory first, then plays it from memory.
With Streaming Checked, It streams the Video from the HDD as it plays, and this can cause playback issues.
VG actually Plays two HD video layers at the same time.
A VIDEO OVERLAY MASK Layer to Allow the Background to Show through, and the Actual Model layer you see.
So it is almost twice as CPU intensive as even watching a HD movie.
One last thing you can try is Video Acceleration.
Sometimes turning this OFF can help..
My system is normally in the 48% to 75% range with VG active.
Duo cards push it to 100%
I've got 4GB memory ( XP SP3 only really access 3GB of it. )
Run my cards off an External USB HDD, so I alway have Streaming NOT CHECKED.
When I had only 1GB of Memory, I had to Keep the Video Acceleration at OFF, other wise I got Stutters and Jitters. Clips would Pause, and then go Really Fast for a second or two to catch up.
If I could swap out Video Cards, I'd Use Nvidia , but this laptop came with ATI.