I'm tempted to say "the TV probably uses Linux", and it probably does, but I don't think it's actually relevant. ;)

From what I remember of the MPEG standard, VLC is getting it closest to right, with WinDVD coming a "close, but wrong" second. Corrupt I-frames are causing the weird pixellation, I suspect, and WinDVD is just barfing on particularly mangled ones (or occasionally throwing up its hands in horror and giving up until the next B-frame).

That's the best I can come up with; the software players are having issues dealing with the minor errors, because they expect the stream to be perfect (and the sun to shine out their ass, etc al nauseum.) :D

The TV does actually use Linux, though I'd guess that it has a dedicated coprocessor for the MPEG video decoding.

The pixelation in VLC looks suspiciously like they've using nearest neighbour resizing, which implies the resizing is being done in software rather than using a hardware overlay (which generally gives at least bilinear resizing for free).

Speaking of giving up until the next I-frame (P- and B-frames are deltas, I-frames are the keyframes), I have found a couple of pieces of free software that claim to be able to tidy up raw recordings. Except rather than do the sensible thing and mark corrupt frames as drop frames, they just throw them away. If you're lucky they will also throw away the matching segment from the audio track, if not then your recording loses sync part-way through.