Ok I just built my first HTPC and there is definitely something wrong. My current components are:

Intel i3-2100T
ASRock H67M-ITX motherboard
4G DDR3 Ram
2TB HDD

My plan was that i didnt need a video card cause i was going to be playing either from the HDMI slot on the motherboard or stream the video the my ps3 or other via PS3 media server. Now, all the video i play is very pixelated and fuzzy. This happens even when i stream the video. Its not the video quality because i previously ran these videos on an older computer and it played them beautifully. I've tried VLC and KM player. Both have the same result. Its an ISO file so it should be good quality. I've reinstalled my drivers directly from the ASRock website. The only other video driver i have is from LogMeIn, but that should only be used when im use RDP.

Can the motherboard capable? What am i doing wrong, please help.