TV quality issues

Unsurprisingly I've been watching a lot of my new Samsung Hln437w TV recently :-)

It's a pretty looking TV: and it's 43 inches which makes it superior to all those 42 inch wannabees out there!

It started out looking pretty awful but after borrowing Jay's Avia: Guide to Home Theater DVD. After using that it looks great. DVD's look beautiful on it, and TV does as well. The latter kind of surprises me because i've seen so many High-Def TVs that make TV look awful. The quality of the computer screens outputted through DVI are also pretty stunning. It's completely usable as a TV monitor and Windows Media Center looks absolutely fantastic.

Well, I should qualify this. _Almost_ everything looks fantastic. We were watching Finding Nemo and trying to keep our jaws closed with the gorgeous underwater scenes. And then we got to the scene with Bruce (the shark) taking Marlin and Dory through the mine field. OMG it looked bad. What should have been smooth gradients in the deep-blue to black range, instead came out as like 4 colors with terrible pixelated transitions between them. This isn't the only time we saw this. It seems like very fine transitions between dark (near black) colors and also extremely fine transitions between bright (near white) colors.

Anyone have any ideas about how to make this better? Currently I'm using PowerDVD sent through DVI to to the TV. I think i've set up PowerDVD to do no adjustments (except to use hardware acceleration) and just output the raw decoded content to the TV. On the TV i've adjusted the contrast/brightness/color/sharpness as per the Avia disk. If you think I should be doing anything else, or have any suggestions on how to fix this let me know.