This started a while back, I think about 6 months after i installed Windows 7. I have videos in many different formats and it doesn't seem to affect only a certain one, but avi, flv, wmv, and mpg are 4 i have seen this issue with. What happens is i open the movie and it will only show in a rectangular area about 1/5 the size of the screen, and it is NOT centered but may be at the bottom right for example. And i can try and go full screen or any thing and it only shows in that same size box and place on the screen. I am using media player classic, and while i know some of you will say thats the problem, it worked fine till one day for no reason i can determine this started.
The issue turned out to be origin, the app that battlefield 3 uses. So when i have played the game i often leave origin running so if i want to play later it's already open. Anyways, when origin is running it causes this somehow. It hit me there must be something running that causes it because sometimes the problem doesn't happen. So i started thinking maybe it's origin and i tried it. Sure enough when i closed origin within a few seconds a video i had running went back to normal.