I have a Dell Inspiron E1705 Duo Core @ 2Ghz 2GB RAM, NVidia Geforce Go 7800.
I was getting this problem, but only with .mpg files or dreams created using .mpg files. Dreams created from .wmv worked fine. I believe my problem was with Roxio EMC 9 as I started getting the problems with dreamscene after installing EMC. Once I uninstalled EMC dreamscene began working fine again.
I am not sure exactly what the problem was, but I am assuming it some kind of problem with codecs that Roxio installed, so you might want to look at the codecs on your system.
I hope this helps...
Ron