Set the output sample rate in the Creative Console to 96 KHz and try this again.
Ok, tried this, I get the same horrendous stuttering. Played with every possible VLC setting (WaveOUT, etc.). No difference
Not that I want to use VLC, it was just a test. Is there nothing out there apart from PowerDVD that I can use for Blu-Ray playback that supports ATI Hardware Acceleration? I'd still need to nail this audio problem though. Any more ideas?