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I've read that the distortion may stem from the type of processor you are using. I am using an E4600 and see those lines which you decribe. One post stated that a Core 2 with a 1333MHz front side bus should not see these lines but who knows.
Thanks for your quick reply. As it turned out, there was an update to Powerdvd and when I applied it the problem went away. I am going to try a number of BD's from the local library and see if it is indeed solved.