I've got a helpful reply from Chetan of Cyberlink Tech Support (see below - after my comment). Thanks Chetan.
The problem I experienced (frozen frames, lagging audio in preview) has been solved. I did all that Chetan suggested and found his suggestion No 2 seems the most effective. Once the color depth was adjusted to 16 bit, and resolution to 1152x864 pixels (I had to adjust it by trial and error to avoid distortion on my 20" monitor), the preview improved even with 'normal preview resolution'. This gives me a very workable resolution on the preview screen (ie. enough visual details, legible text. etc). I'm happy with what I've seen so far. Let's hope this will work for you too.
Chetan's suggestions:
...
In regards to your issue related with CyberLink PowerDirector 10 software, I would like to inform you that in every Video editing software, when you insert a picture or a video in a set of aligned videos in the time-line, then, the new added media files always disturbs the alignment and synchronization of the video along with the audio.
Therefore, I would like to inform you that you need to make them in synchronization again by manually adjusting the video and the audio. Also, if it gets you to delete some files and insert it again, then, you have to do it.
Also, please try following the instructions given below to resolve your issue.
1. Please update your VGA card driver, sound card driver and capture card drivers. Please contact your vendor or visit the manufacturer's web-site for the updated drivers.
2. Reset your display settings, screen area to 1024*768, color depth to 16 bit and monitor refresh rate to 60 HZ.
3. To avoid any compatibility issues, please close all other software and utility applications including virus scans, screen saver and instant messaging software before you launch PowerDirector.
4. Increase Virtual memory:
a. Right click on "My Computer"
b. Select Properties -> Advance
c. Click on "settings” under Performance.
d. Select "Advance"
e. Click on "change" under Virtual memory.
f. Select "Custom" and enter initial value as "512" and Max value as "1024".
5. Please click on the link below to update 'Direct X' drivers:
http://www.microsoft.com/windows/directx/default.aspx
6. Empty the contents of the C:\Windows\temp folder and C:\temp folder, if you have one. Then empty Recycle Bin.
Now, check and see if the program is working properly. However, if the issue persists, please provide me the following information so that I may better assist you.
1. Serial number of the PowerDirector 10 Ultra software that you are using. SR should be like "SR_No=XXXXXX_XX".
Please follow the link given below to know how to find the serial number:
http://www.cyberlink.com/prog/support/cs/faq-content.do?id=2615
2. Your system information file (DxDiag.txt). You can use the steps that follow to create this file:
Start --> Search --> Run --> dxdiag --> Save All Information --> a DxDiag.txt file created.
3. Screenshot of the error message you are getting (if any). To take screenshot, please follow the steps given below :
a. Press the Print Screen key on your keyboard when the error appears on your screen.
b. Click on Start -> Programs-> Accessories-> Paint.
c. Paste the screen capture there by pressing Ctrl+V
d. Save the file with the extension name .jpg and then send to CyberLink Support for analysis.
4. Your system Event Logs. To generate Event Logs, please refer to the link below and follow the instructions.
How to generate Event Logs?
http://www.cyberlink.com/prog/support/cs/faq-content.do?id=10449
Please revert using the following reference:
>>https://membership.cyberlink.com/prog/support/cs/support-login.jsp<<
Please feel free to contact us back for any further clarification or for any assistance related to CyberLink products.
Thanks and Regards
Chetan
CyberLink Technical Support