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Both of those CPUs will work just fine and believe that you will be happy with either of them. I would not be overly concerned by the graphics card compatibility list. If the card supports CUDA or ATI stream then you should be fine. One thing you should consider is your hard drive configuration. You want to minimize the bottleneck caused by the type of hard disks you use. You may want to consider at least one solid state drive for faster performance if you can afford it.
Yes, your video card should work fine.
The best way to put it is that it does work, but it appears to be system specific.
What happens of you produce a file (DVD HQ preset) and play the file on your computer? Does it still look bad?
Mr. Scary

CUDA is only supported for MPEG4 and AVCHD rendering. ATI Stream will do MPEG2 as well. If I remember correctly, I think I read on the PD8 forum several months ago that one of them may also render WMV as well.

I was working on a project recently of a photo slideshow and I was rendering to MPEG4 at medium quality. It rendered at about real time converting a series of JPEG clips with magic motion and fix/enhancements using CUDA with my 9500GT and a Q9300 CPU. The CPU was running at 95% the whole time. When I used to have an E7200 dual core CPU, I saw a noticeable improvement with CUDA with my 9500GT, but not so much with the Q9300.
Your file does not play well on my system either.
Are you sure your monitor is not HD? Is it an LCD monitor or an older CRT monitor? If it is an LCD monitor what is its native resolution?

An HD monitor allows you to view your video at the same resolution as your produced HD video. If an LCD monitor's native resolution is not the same as your window's display setup then the image will be distorted. A dual monitor setup allows you to preview your edited video on the second display while editing on your primary display. I actually had this setup at one point, but I found that it took up too much desk space.

The cost for good HD LCD monitors has dropped a lot in the last couple of years.
There are many reasons for having multiple tracks. Lets say you want to do a split screen video or include a picture in picture. For a wedding video I edited I kept my master video in the main video track and inserted my secondary cameras in the other tracks. This allowed me to insert seamless cuts from one camera to another and this kept everything in sync. Often I'll make a slideshow and on the title screen I'll have multiple still images. Using a different track for each image allows me to resize them as I want and add custom enhancements/effects.

The main point of this is multiple tracks allows you to be more creative.
If that's the case then this is truly a bug in the software.
If it doesn't show up this tells me that the file production did not get completed. It's like when you start to produce a file and an icon of the file will show up in the output directory, but if you stop the production the icon is deleted along it whatever data was generated.

The odd thing here is that it says its done. Have you tried any other file formats and has this ever occurred previously with other clips you've edited?

I would also double check your output directory to make sure it is going where you think it is.
Does this happen all the time? I was recently editing a project consisting of scanned images of pictures taken in the 1960's for a slideshow I was making. I tried rendering to MPEG2 DVD HQ and in a 18 minute video I had 25 instances where jagged black bars running horizontally would appear in the video (I was using magic motion). This occurred on two occasions during rendering. On the third attempt (no changes were made) the produced file came out just fine. I suspect it may have been a hardware issue on my part. I did not have any trouble when I tried rendering to a MPEG4 file format.
Interesting. Have you tried doing a save as? Whenever I save I normally do a save as and change the file name.
Here's the PDToots tutorial for making custom WMV profiles. It's written for PD8, but it should be the same for PD9.

http://www.youtube.com/user/PDtoots#p/u/14/vw2RlzIt9EM
The HG20 records all video and images to an internal 60GB hard drive or a SD flash drive. To get the video into the computer I just copy the desired videos from the camera's hard drive to my computer. In PD I just import the video files or folder from the Edit screen. I don't import every subfolder.

Why do you want a Popcorn Hour? Last year I build my own media center PC. It was built on an AMD HD4200 GPU and a 2.9 GHz AMD Dual core CPU. It has a 500 GB HD, Blueray/DVD drive, HDMI video/audio, SPDIF, an a HD TV tuner. In my opinion a full computer offers more flexibility than a dedicated media device.
Size estimation has not been particularly reliable in past versions either. You can fit about 1 hour of video using the DVD HQ profile.
If you go with AMD consider one of there 6 core processors. Excellent performance at a reasonable price.
I would download the trial and give it a shot. I'm using the Canon HG20. It's about two years old now but I'm very pleased with the image quality.
Dafydd is correct that more information is required to solve this particular issue, but you did make an interesting point. The fact that this also happend in PD8 suggests that the problem maybe due to your hardware or video/audio codecs. The diagonsitic file and sample clip would be very helpful.
Your system should work fine as long as you don't overload it with too many HD video tracks. PD9 supports HD video acceleration and your 9500 GT will do just fine for playback of HD video. I'm also using a 9500 GT and I get low CPU usage when I playback 1920x1080i 24 Mb/s AVCHD video. I get a spike in CPU usage (Q9300) when I turn video acceleration off. While you have an older dual core system, your video card should be able to handle it. Just make sure to update the video card drivers.
I haven't had any trouble running PD9 Ultra 64 bit on Windows 7 32 bit.
I'll go with cross transitions, but giving the user the option to change the default is a good idea.
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