You're in luck... I burned most of last week grappling with that very issue myself
I can't tell you exactly how to get it to work, because I installed, uninstalled, reinstalled, rebooted, and mangled the registry and system files so many times trying to recap *exactly* what I did would be hopeless. However, I *DID* eventually succeed at getting MMC 7.7 to work with WinXP and my AIW 128pro.
Here's approximately what I'd suggest:
1) install the demo version of GoBack. It'll let you cleanly roll back after failed attempts end up mangling your registry so you can try again
2) go to ati.com, and lie. Say you have an AIW Radeon 8500DV, and download the DVD player software, MMC 7.7, and the WDM driver.
3) uninstall MMC and the DVD player software.
4) Install the WDM driver. Remember where it unpacks the files... you'll probably need to go back in a little while. When it tells you to reboot, flip a coin. Heads = reboot, tails = ignore it and continue with step 5
5) Install the 7.6 DVD player software. Don't reboot afterward.
6) Install MMC 7.7. Now reboot.
7) Try to launch the TV app. If your computer hangs (it probably will), reboot, then go into device manager and expand the "Sound, video, and game controllers" node.
8 ) Manually update the driver for EVERY ATI component you see. Tell it to install from a specific location, let you choose from a list, show compatible hardware, don't search, have disk, browse to the directory where the Windows XP WDM drivers were unpacked in step 4, and ignore Windows' dire warnings that the drivers aren't known to work/signed/might not be compatible. Don't let the computer reboot until you've updated every last one of the ATI WDM drivers.
9) Reboot. Try the TV app again. If it STILL hangs, go back into device manager, and make sure all the drivers for the ATI WDM devices you just updated in step 8 have December 3, 2002 (give or take a day) datestamps. If one or two don't, you probably forgot to update them. If none of them do, Windows probably sabotaged your efforts.
If Windows undid your hard work (thanks to Driver Protection), you're going to have to use add/remove programs to uninstall everything related to ATI products, reboot, then reboot into safe mode and somehow manually delete anything and everything remotely resembling an ATI driver, .inf file, .dll, and anything else remotely associated with ATI, its products, and maybe even video in general. And scrub any and all evidence anything ATI-related ever existed from the registry. You DID make a backup first, right? This can easily fry Windows beyond repair... but Windows Driver Protection can be stubborn, and sometimes nothing short of total scorched earth deletion can subvert it and force it to let you install the drivers YOU want.
On the other hand, if MMC's TV app runs, but when you capture you get weird results (I initially got captures with mangled, muted chroma data in the top half, and black & green video in the bottom half), try selecting a different capture format. If that succeeds, you can try reselecting the format you tried the first time around... hopefully, the act of choosing the other one will have reset whatever was screwed up and it'll work now. At least, it did it for me
Another tip I read somewhere... go into the registry and find
and change the value from "352" (hex) to "100" (still hex).