thanks Beejaycee and Mark,
Those novice step by step guides sorted it, now it runs smooth as the original, I did this before I saw Marks post so it appears my system can cope, thanks anyway.
I would like to know what was causing the jaggies and frame lag though! There was a number of likely suspect default settings, for anyone else here's what I reckon (i'm a noob though so no flames please

)
DV type changed to type-1 (from type2)
Playback method - high quality (from good I think)
Resampling - best (from good)
preview to my large data drive
edit format to avi
Plug-in to Direct show
there were other options changed but if anyone else is trying I think one or all of the settings helped.
I SHOULD change them all back and do step by step, but it aint broke so....
Much appreciated for the help guys!
Also for anyones info, I was looking for the manual for the MV 500i
and it wasn't on Canons site (you can pay- it says??) - if anyone is looking for it you can find it on the australian site