Ok, I've got mine working now!
I did the following:
- Copied msvidctl.dll into \windows\system32\ folder
- Goto Start > Run > type regsvr32 msvidctl.dll and click ok to the dialog box that pops up that says something like msvidctl.dll was succesfully registered.
- Watch DVD's in CF!
msvidctl.dll is obviously removed by nLite and can be found on any full xp install in the system32 folder. I've uploaded a copy to the downloads section for convinience.
P.S. Make sure you've got a codec installed too like this free GPL directshow codec