"Frame by frame" didn't change in version 257.1051. Still works by pausing movie (
[spacebar]) and use right and left arrow keys to step through the movie
(Note this does also depend on the possibilities of the decoder/filter used!)
Make sure to uncheck/deselect "Seek by keyframes (AVI and MKV files)" under
(richtclick >) Options > Preferences > General [General settings]
Also: don't use "overlay mixer" for video rendering but instead e.g. try "Internal renderer Direct Draw surface" or "Internal renderer overlay" as "Rendering mode" under:
(rightclick >) Options > Preferences > Video > [Video rendering]