Yeah, I confirm, the 7600GT isn't supported by MPC-HC.
Look
HERE for supported cards.
If you use CoreAVC, you should be able to handle any 720p video with your XP 3200+ though.
1080p will be available only if you upgrade your graphics card. If you don't want the 3D-performance to drop, just get yourself a Radeon HD3650 like DrNein suggested. AGP versions cost about 65€. If you don't mind 3D-performance dropping, an HD2400pro will do just fine, for less than 40€.
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