I have a similar system, and the exact same problem.
INTEL P4 2.6 with HT
MSI 865PE Neo2
1GB DDR Win XP Pro
ATI Radeon 9800 Pro
ATI TV Wonder VE
ATI Remote Wonder
SB Audigy
I know it is not the cable conection.
I have moved the TV card from one PCI slot to another.
I have installed and uninstalled (twice) ATI Multimedia Center Versions 8.8 and 9.03.
I have the latest ATI catalyst drivers.
I dualboot this PC with Mandrake 10.0 and when I run xawtv the
picture is still fuzzy the same as XP.
It must be a hardware problem.
Mizzy