In reply to my own question:
I did a full reïnstall of windows 7 again, trying out when exactly the problem occurs. It seems that the problem is related to the IDT audio driver. With the default Windows driver, I have no problem. If I install the latest driver available on the Intel website, media player responds erratically and hangs.
I removed the IDT audio driver, installed all the other latest drivers and everything seems to work fine now.
I discovered the same problem with the most recent IDT audio driver. Clean install of Win 7 32 on the DG45ID, updated the BIOS. Loaded all the latest drivers but the IDT driver. No problems running WMP or MC with audio and movies. Next, loaded the IDT driver and after several minutes , total lockup requiring hard boot.
Hopefully they will address the problem......but I doubt it.
My impression is that your problem is specific to DVD or blue-ray movies. I have no problems with playing movies on-line using Explorer 8. I have IDT audio driver 6224.3v182 and had no problem with 6224v1.78.
Just found this post - I'll bet you are using the optical (TOSLINK) output for audio. Hopefully Intel will work with IDT to come up with a driver which doesn't exhibit this problem.