1080 plays fine on vlc but stutters on xbmc frodo??

I've read the posts about video stutter / audio settings etc....I even questioned my video card on my windows xp machine (geforce 8400 gs) but VLC on the same machine plays them fine.

I'm referring to HD 1080 mkv files.

I see some saying switch to hardware acceleration... But I don't even see that setting.

P.s vlc plays them fine at default settings

Any ideas why frodo is a little short and has big feet?