[MassIV]

Far as i can see most things have been mentioned. Make sure to use Nvidia settings, latest driver.

Try some different render methods then DXVA like: Auto detect / Pixel shaders / software, whatever you have available.
Don't crop black bars.
Try some different view modes. Specially interested to hear if "Original size" makes any difference (if it looks small but sharp).

Still feel it is either bad scaling settings somewhere or a bad driver.

But you could also try:
Deinterlace: auto
deinterlace method: auto
Sync playback to display: yes
A/V sync method: video clock

And plz let us know if anything changes for the better. As it might indicate where it is coming from.