Is this only happening in DivX videos, and none other video formats? Have you tried the configuration options in DivX? Are you using the DivX player, or are you using the DivX codec to view this format video on another player, such as Windows Media player?
If this is only occurring in DivX videos, try the DivX player and also try viewing in Windows Media player using the codec. Perhaps one player will show the colors correctly for you. I personally always use Windows Media Player when viewing DivX, with no difficulties.
The newest Radeon drivers should be just fine. You've got a great card!
Ensure that your AGP drivers are current. Since you didn't list your motherboard, I have no idea if your AGP controller is Intel, AMD, VIA, SiS, ALi, or some other chip maker. Your Device Manager should let you know what AGP controller you've got, and the driver you'll need should be listed here:
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