Do you have any noise reduction enabled in post processing?
It's got to do with hardware acceleration, my x1950 has the same problem when I use Media Center, but it never really bugged me as I sit so far away I don't notice it too much.
If you use a different DVD player and disable hardware acceleration does it still happen?
I don't have another dvd player and how do I disable hardware acceleration?
I haven't seen a way to do it specifically for media center but if you go to display settings (Right click on desktop) -> Settings -> Advanced -> Troubleshoot and drag the slider to the left it will stop it but unfortunately everything else suffers as a result of this.
Try using VLC media Player, that's what I use when I'm near my screen and the after-image annoys me.