My trial decoder run of Intervideo's WinDVD decoder expired at home mid-week, so I tried out PureVideo one last time, but it didn't seem to be deinterlacing well at all, despite the settings I used.
So, my Nvidia problem is essentially solved now, by buying WinDVD 7 instead. It doesn't seem to have any tweakable options that affect MCE playback (that I've seen), but it just works. So I'm happy.
Jolly good show -- I'm glad you were able to find a workaround in the end.
The simplest workarounds are often the best :)