You should check this out:
http://home.comcast.net/~exdeus/ati-hd2x00/
It seems with
PowerDVD 8 those hacks are required for the 2400 series of cards. Once you do that you should be able to enable hardware acceleration, which, if you look now is disabled. I don't use ATI cards in my HTPC so I can't really help if it doesn't work, but, I saw this in a thread on another forum.