I decided since i owned the original joytech av selector box (the one with scart inputs) that i'd get the updated HD model that's got component outputs on it.
http://www.joytech.net/products.php?section=viewprod&productID=79&lang=1&catID=9
hooked up my dvd player,xbox to it the picture was decent enough didn't seem to be any interference as soon as i plugged in the optical input though, you get fuzz on the screen. I took out the optical input and then the pictures fine?
've got a logitech Z-5500 Digital surround system, on the older joytech as i said when i was running my dvd player,xbox and stb through scart all with optical i never had one problem.
I don't think it's related to the tv , maybe it is but it seems like the surround is somehow interfering with the signal. I was using decent quality component cables as well btw.
Really annoyed about it since i returned it and got a replacement one and the same thing happened.
Now i need to find another brand one or wait for the xbox 360 to be released and give that a go.