Are you running on Mac OS 10.4 or later?
If so, go into the DVD player, start a movie playing, and then go to Window --> Video Properties (can't be sure if that's exactly what its called as I'm not at my Mac now). This window lets you adjust colour, tint, contrast, and brightness. Significant changes to this really *could* give you the playback problems you are describing.
If thats not it, try going into Apple Menu --> System Preferences --> Monitor/Display. Make sure the screen mode is showing as "Millions" of colours.