Vsync works in Vista as long as Aero is enabled, but XBMC does not output the proper fps so you are not getting smooth playback on a X4500. I found no way to remedy this at all when I was on Vista. If you have this working and are sure you are getting 60fps out of XBMC, please detail how.
Vsync works in WinXP and you can get the proper fps out of XBMC, but to get it working past build 16051, you need to either switch to windowed and back to fullscreen once in XBMC, or switch resolutions while in XBMC. Vsync needs to be set to driver select, and "asynchronous flip" should be set to off in the intel gfx settings.
I detailed all of this in http://trac.xbmc.org/ticket/5202
In conclusion, Intel's drivers are total shit. I put a $25 low profile Nvidia card in my machine and everything works just fine now.