I'm using VLC Media Player; I've tried this before. Suddenly, the image was in this way on ALL .avi/.mpg etc. files; also those who worked fine just a minute ago.
I have a theory that it might be because other programs are running? Perhaps when DVDShrink is running? I'm not sure. Anyway: Here's a picture of the problem, and it shows how awful it is to watch a movie with it: