The video card resolution you listed is somewhat of a strict figure when working with video. If the project aspect ratio is set to 4:3, the preview resolution may be equivelant to 720x540 in order to match the ratio exactly - something I've seen happen with my editing software, Cyberlink PowerDirector. Camcorder Video that matches the 853x480 resolution virtually doesn't exist as far as I know. If it does, your editing software will strictly forbid it, converting it to 720x480. Screen capturing software is one exception that I can think of. If you captured DV via FireWire, you've probably had experience with dropping frames or possibly single fields (every other line that makes up half of the frame). With interlaced video, two fields create a frame.
Have you checked any possible "Drop Indicator" (amount of information dropped) during the capture process? This also might be a problem with your camcorder. Does it play fine on TV?
I'd also consider upgrading your graphics card. 1024x768 is currently the average computer resolution of today, so you probably won't need to rack up a lot of cash for a higher-end graphics card directly up from your level.