When using DirectShow and Haali Media Splitter to playback MPEG4 or MKV videos encoded in H264, picture can be distorted or "scrambled".

If your video looks like that, you need to adjust settings in the Haali Media Splitter.

Use the Media Splitter properties and select "Use custom media type for H.264" and value "Yes". This will properly tell the decoder filter  to decode H.264.