Now that I have been convinced that the picture quality issues are due to the low bit rate of the VCD's I was using, as many have stated, I now have a Philips DVD724AT and want to test its capability and make sure my encodings are correct. I ran into a few issues (one encoding and one media related) so I decided to use templates done by others and modify from there. I used a DVD ripped with Smartripper, Frameserved to TMPGEnc with DVD2AVI and used the templates listed below from:

http://www.kvcd.net/dvd-models.html

In particular I used KVCD, KDVD half D1 and SKVCD. I also modified KVCD which had a max bitrate of 1750 and set it to 4000 no other changes (wanted to see if this unit would run a 4000kbit/sec like listed in the compatibility chart).

The Good:

KVCD ran fine
KDVD half D1 ran fine (suprised since the sound is 48,000 WOW)
SKVCD ran fine Is this one actually the CVD I think it is

What did not work:

Encoding/DVD player issue:

Not sure if I modified the template correctly to try to test the ability of this DVD player to play 4000kbit/sec VCD. As I stated above I modified KVCD which had a max bitrate of 1750 and set it to 4000 no other changes. This ran smooth but there apeared to be what looks like color issues. the image had RED blotches very obvious on faces but in other images as well like the sky. The higher bitrate definitely smoothed out some high motion quality issues I was having so that is good. Is this problem because I did not use the proper encoding settings or is my particular unit not capable of the 4000kbits per second like many others have reported? Odd that the movie ran smooth with absolutely no pixelation. Now this may be that I am testing using my PC not my TV yet so I needed to mention this

Media:

Of course I made test CD-RW's of standard SVCD, VCD and CVD and the only one that did not work was the CVD. What I found was that it was the particular CD-RW brand I put the CVD on. I have three brand and two worked for CVD so that was great. Now what I noticed was that the CD-RW that did not work was a 650/74 min disk and all of my 700/80 min CD-R and CD-rw work. Is there a reason that the 650/74min will not work or are those just bad media they are Imation. I tried a burn with both NERO and EasyVCD same result would play with tons of pixelatin and sound was messed up.

Lastly (for now):

Which is better to use KDVD half D1 or CVD/XCVD. Quality of picture is key to me but I also would like to get a minimum of 30 minutes per CD so that may make a difference. Also I want to maintain DVD compatibility.

Thanks ALL. I will write a review of this unit but want to make sure that I do things right first. I will also follow-up on how improved the quality is when I get this unit hooked up to the TV right now it is hooked up to my PC