The problem with audio is probably something with the HDMI audio driver included with Catalyst. So after checking everything, if it still doesn’t work go into Device Manager and find the HDMI audio device and manually select the AMD/ATI HDMI driver.
The “Video files are not working or not installed…” error usually indicates that something is wrong with DirectShow. If you have a codec pack installed, get rid of it and see what happens. DVDs should play OOTB.
