Assuming its not just complaining due to lack of a secure video path (in which case, try AnyDVD HD, see if it "fixes" it)...
The 945GM chipset on that board can only handle accelerating MPEG2 iDCT and nothing else, so you'd pretty much be looking at full CPU decode. Though, with the right CPU installed that shouldn't be a problem.
From http://www.commell.com.tw/Product/SBC/LV-677.HTM :
"Video Memory: Up to 224MB shared with system memory"
This may be the main limitation, and a BIOS-based one as well (I'm pretty sure the chipset / drivers could use more than that if the BIOS would set it at boot ... )
I know when I was fooling around with an old AMD 690G based motherboard, using software playback with the onboard video of the 690G chipset, I had to increase my video memory to 512MB for it to work properly. At 256MB it would run, but I had weird issues with the screen being too small (i.e. when I full screened the video it would take up like 1/4 of the screen in the corner, and not show the rest of the video). With 512MB of video memory, it worked fine. This was with a AMD 4400+ X2 dual core, so likely CPU wouldn't be the problem (depending on what CPU you installed in the LV-667).
I plan to get one of these AMD Zacate mini-ITX boards (which will handle BR's with hardware accelerated decode just fine) myself... for $100-$150 or so, not bad. Even though, of course, the screen in the car will be well below "Full HD" resolution. For the same reason as you - having everything in both formats is silly.