I had this problem too (windows 7, WMP 12 it appears) with DVD's.
I believe it started in conjunction with me adding another drive to my system (?)
Anyway the fix that worked for me was (I think, anyway), to go to device manager (right click my computer -> properties -> device manager) and disable one drive. Then reboot. Now it works. Now re-enable the drive. Works from then on. Weird.
Many other things that I tried resulted in the DVD being able to playback correctly *once*, then I would get the same message (ex: re-install video drivers. DVD plays back once. Then error message again after that, or install a new audio codec, same deal.
Weird.).
Other hints from the web:
"nero 8 maybe messes things up perhaps?" http://www.howtogeek.com/forum/topic/problems-with-windows-media-player
"maybe it is using the wrong audio driver" http://www.bleepingcomputer.com/forums/topic81860.html
"cycle a system setting, then it will play once, then cycle it again" http://answers.microsoft.com/en-us/windows/forum/windows\_vista-sound/cannot-play-a-dvd-in-windows-media-player/e78aff8d-d921-4576-bc23-12f5c5ec9388
"make sure all of your monitor devices are enabled" http://www.vistaheads.com/forums/microsoft-public-windows-vista-general/111615-please-help-windows-media-player-cannot-play-dvd-because-there-problem-digital-copy-protection-between-your-dvd-drive-decoder-video-card-try-installing-updated-driver-your-video-card-2.html
if you updated your DVD's firmware to some "region free" firmware, then flash it back to standard (also somebody else in this thread mentioned that flashing it to its latest revision helped them, above).
Removing daemon tools might help, too.
Also somebody above mentioned a way to re-install DVD drivers. That might help, too.
A reboot in there somewhere might be required, too.
GL! (of course, playback with VLC or PowerDvd 8 always worked fine, just not WMP...weird).
-r
PS now I get pixelated jerky play the first time I play it, but the second time it works fine. Also weird. But at least it works. Also related is http://social.msdn.microsoft.com/Forums/en/windowsdirectshowdevelopment/thread/77d75c54-d8d7-4616-907d-be627fc44bdc