This is the exact type of experience I've had with XP, when watching any videos online above 240p it would play back choppy or worse. I maxed out the RAM to 512mb too. It's just a bloated OS that sucks up all resources.
As for DVDs, they can be played on Win 98 hardware so they better play fine on XP.
Also I remember trying to play the PC version of Shadow of Destiny and even though my hardware all surpassed the minimum requirements, it ran so poorly it was unplayable. This is a game from 2002, I used this PC from 2005-2009ish. I could play other games but it was common for me to have issues in some way.