I tracked down this problem on Win7, and it seems to be the function "UpdateOverlay" which returnes "DDERR_OUTOFCAPS". This is a known problem with Aero as discussed here. There you can find some solution, although I did not have time to try it. I am working on a OpenGl based (better say OpenSceneGraph based) video renderer so I did not dig deeper.
But I did not find the issue of slow fps! That is something I also would like to know more about