I use Win7 64, processor intel i5 2500k, mb chipset H61, integrated video card and last video driver from this site for hd 3000. Download Media SDK 3 beta. Start sample_studio in samples. Open file MP4, video h264 and aac audio format, and see -
Just to confirm, do you have a discrete card (non Intel) installed or are you using the Intel intergrated graphics part of the platform? The processor you are using certainly does support both HW decode and encode.
The easiest approach to verify HW decode using Media SDK is to use the command line "sample_decode" sample. The enable HW decode use the command line options "-hw -d3d". Note that the "sample_decode" sample only handles elementary video streams and does not support containers such as mp4.
If you need demuxing/splitter support to be able to process a mp4 file then I suggest you first try the "sample_dshow_player" sample.
For the SW case you do not have to explicitly set the "-sw" flag, it is the default setting. Also, "-d3d" (gfx memory surfaces) is not recommended for the SW case, you'll gain better performance by keeping surfaces in system memory.
Other than that the command line looks ok. Note: the output is a raw YUV file, alternatively you can use the "-r" option to dender the decoded stream to a window.
Decoding speed will depend heavily on the type and resolution (etc.) of the stream. Also, keep in mind that if you are decoding a high resolution stream using the sample, most of the time will be spent writing the raw decoded data to file.