This is not an Intel driver bug. I'm seeing the same issue here with a IBM 
ThinkPad T30 laptop with an external display.
Oddly, the issue happens only when starting a video in the external display 
with 1680x1050 resolution. Videos play
fine in the laptop display with 1025x768.

The video chipset:

ATI Technologies Inc Radeon Mobility M7 LW [Radeon Mobility 7500]

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BadAlloc error when playing a video with xv
https://bugs.launchpad.net/bugs/49360
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