I've just had a quick tinker on my AMD laptop (HP/Compaq 6715b Turion x2, whatever that means) and I can set the built in display resolution to 1920 by 1080 (and more, much more
Whether that is a realistic enough 1920 by 1080 to avoid the rescaling I really don't know, and I don't have any HD source material, but it should be dead easy to try something similar on yours:
controlpanel->display->settings and see what's available on the Screen Resolution slider
The "hardware acceleration" slider is around there too:
display->settings->advanced->troubleshoot and you should see it.
If it's not set to full, try it on full. In fact why not try all the settings!
Note that if "hardware acceleration" wasn't set to "full", there may have been a good reason for it (eg some misbehaviour on the GPU sometimes), so even if "full" works for HD playback, you may want to return it to the old setting when not using HD playback.
I'm not sure it's 100% relevant but you might want to have a look at
http://download.intel.com/support/graphics/sb/intelg...
and see if anything is applicable to your setup.
Note that with laptops it's not unheard of for vendors to build in their own driver rather than the Intel one (or in my case, the AMD one). If this is the case AND you don't mind tinkering AND you have a decent backup (or trust XP to do one for you) you could try replacing the Fujitsu driver with the Intel one found from
http://www.intel.com/support/graphics/detect.htm
No guarantees though.
According to http://www.intel.com/assets/pdf/datasheet/316273.pdf your chipset with the Intel driver should support more than enough resolution for HD and should do hardware-accelerated scaling (bottom of p14). The chip itself should also do HDTV to a TV connector if Fujitsu have provided one (HDMI etc).
You might also want to check that your DirectX is reasonably up to date and sensibly configured
start->run->dxdiag (no I'm not going to explain it, t'Internerd has the answers).
I think Intel say your chipset should support DX10 but that's Vista and later so you should see DX9.



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