Do you have the same video card drivers installed as you used with MCE 2005? I know that some companies offer seperate MCE compatible drivers on their website. Try experimenting a little... when you first installed MCE 2005, did windows use it's own drivers for the card?
Update: You aren't the only one with this problem using the Matrox G400 (see here:
http://www.xpmce.com/forum/ftopic43573.html)