If you have a PC with a lower capacity CPU, then ffdshow indeed is a better option as compared to the proper codecs. Otherwise preferably use codecs. (In my post as linked to hereabove, I already explained that DivX codec can also be used for XviD movies.)
Did you already try different overlay settings?
(proper setting depends i.a on your graphics card)
(rightclick > Options > Preferences > Video > Video rendering)