what mobo and video card are you using? first thing I could suggest to you is probably uninstall all your video drivers, tv wonder drivers and any codec packs and redownload the lastest drivers for the video card and the tv wonder 650.
latest tv wonder 650 driver from ATI's site:
https://a248.e.akamai.net/f/674/9206..._wdm_55811.exe
oh yeah, i just remembered I think you have to install powerdvd to get it working on XP... it uses that codec. I think something like the k-lite codec pack or vista codec pack should have it. or get your hands on a version of powerdvd