I can confirm that this issue still exists on Hardy with a GeForce 8600M GT. 
Sync to vblank for video rendering does not currently work.
Note that I have sync to vblank enabled in CCSM. That fixes the window tearing 
while moving, but not video tearing.

The comments by an NVIDIA representative might be relevant in the
following thread:
http://www.nvnews.net/vbulletin/showthread.php?t=113599

Seems to me NVIDIA is blaming compiz. Someone should contact them
directly and sort out how best to fix this issue.

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compiz+nvidia: tearing in xvideo (totem/mplayer/VLC/XINE)
https://bugs.launchpad.net/bugs/151674
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