Don't know if you got this sorted out or not.....
Basically you can get H264 acceleration done free as long as your GPU supports it by using the new MPC-HC. See some additional info below for getting it to work.
http://en.wikipedia.org/wiki/Unified_Video_Decoder#UVD_enabled_GPUs
For ATI - the cards must have UVD support (Unified Video Decoder). See link above and/or listing below. I you have one of those cards or later, please run the test and let me know. Also, please read the WIKIPEDIA link above.
RV770 Radeon HD 4800 Series UVD 2.2
RV730 Radeon HD 4600 Series UVD 2.2
RV710 Radeon HD 4300/4500 Series UVD 2.2
RV670 Radeon HD 3800 Series UVD+
RV635 Radeon HD 3600 Series UVD+
RV620 Radeon HD 3400 Series UVD+
RV630 Radeon HD 2600 Series UVD
RV610 Radeon HD 2400 Series UVD
RS780/RS780D Radeon HD 3200/AMD 780G Chipset
Radeon HD 3300 IGP/AMD 790GX Chipset UVD+
M88 Mobility Radeon HD 3800 Series UVD+
M86 Mobility Radeon HD 3600 Series UVD+
M82 Mobility Radeon HD 3400 Series UVD+
M76 Mobility Radeon HD 2600 Series UVD
M72 Mobility Radeon HD 2400 Series UVD
M71 Mobility Radeon HD 2300 Series UVD
Basically - any of the RADEON HD's will do.
And below is some info that was typed up by me on an external site.
Information here is taken from my friend N1 on IDW. Some of it has been modified to fit in here. Now on to the matter:
For some people, the playback and sending of H264 video streams to your graphics card may not work. If it does not, you need to check and see that MPC-HC is actually sending the stream to your hardware to be decoded. To do this, play an h.264 video in MPC, and while it is playing go to Play->Filters->MPC Video Decoder.
First, confirm that "Enable DXVA" is checked.
If it is, see if the greyed-out text says "Not Using DXVA" or "H.264 bitstream decoder, no FGT."
The former is obvious; the latter means that hardware acceleration is indeed working.
If "MPC Video Decoder" is not present, there's your problem - see below.
If acceleration is not working for you, one of the following is true:
-You have not blocked your other h.264 playback filters; therefore MPC's decoder is not running. Block all other h.264 decoders, and make sure that MPC's is checked.
-Your output settings are not correct. Make sure you're using EVR Custom in Vista or VMR9 Renderless in XP.
-You have not blocked VobSub and switched to MPC's internal subtitle filter. Block VobSub, and check "Auto-load Subtitles" in the Playback page of MPC's settings.
-Your video card does not support h.264 bitstream decoding.
-The video you are trying to decode does not comply with the BluRay standard for h.264. You can confirm this with MediaInfo; look for the number of reference frames. THORA releases, for instance, have a uselessly large amount of reference frames which do not comply with BluRay standards and therefore do not work with hardware acceleration.
Please remember that hardware acceleration was designed with DVDs and BluRay discs in mind, not files on your computer. Therefore, the files on your computer need to comply with either the DVD or BluRay standards for hardware decoding to work.
And also:
Here's some additional info with a quote from the CCCP IRC:
http://en.wikipedia.org/wiki/Video_Acceleration_API
<Dark_Shikari> You have three options for hardware acceleration:
<Dark_Shikari> 1) DXVA
<Dark_Shikari> 2) CoreAVC
<Dark_Shikari> 3) VAAPI/VDPAU with mplayer
And also from the CCCP IRC, I managed to get some help.
<edogawaconan> khat: yes it works
<edogawaconan> 1080p @ 10% on pentium d 930
<edogawaconan> it was ~20% with coreavc
<edogawaconan> 20~50
<edogawaconan> vga is radeon hd 4650
So we know - the ATI HD cards work with H264 decoding WITHOUT the use of AVIVO.
So to recap. In Windows you don't need codecs for playback, just filter packs.
For Windows -> CCCP - SATSUKI - DEFILTER.
*!!!NEW!!!* For Linux -> MPLAYER
For standalone players, the choice is yours:
KMPLAYER
MPLAYER
VLC
etc......
For hardware decoding - specifically of H264 streams - the two major card manufacturers support this - nVidia/ATI - and can be done for FREE using MPC-HC which is bundled with CCCP. If your card does not support it, you can use the software decoding which is available in CCCP (FFDSHOW).
Tests have been done using both cards to show that CPU usage is significantly reduced when hardware decoding is used, and with ATI the AVIVO software is not needed.
For general playback, if you are using the standalone players or the filters - for the older formats, you may need to install QUICKTIME ALTERNATIVE and/or REAL ALTERNATIVE in order to enable playback of just about all video.
If you do video editing, you may need to install a codec, and with CCCP you will only need to install the codec for the format(s) you encode to, as CCCP will allow you to decode all other formats supported by your editor.
That's the meat of the matter, and the final statements. Paid solutions for hardware decoding such as CoreAVC - DivX - PowerDVD - are not included, and other paid solutions for software decoding are left out.