DirectX Problems with Skype -- Solved (use 32bit colors)

The short version: 
      Skype video needs 32bit color quality to do DirectX hardware accelerated video.


The long version:

A few weeks ago I wiped clean an old laptop we use for Skype and reinstalled WindowsXP.  But after the reinstall, Skype video calls were low quality and the framerate was much lower than I remember before I reinstalled the OS.

So I followed Skype's instructions to get hardware-accelerated video:

1.  Updated graphics driver.
2.  Installed DirectX 9.0c
3.  Ran the DirectX diagnostics and tests, but still no change on the Skype video quality.

I could tell Skype was still not using DirectX hardware acceleration because the CPU load simply viewing my own webcam in the Video Options menu was over 40%.

Exploring my video card settings, I saw that for some reason the color quality was set at 16bit, when normally it should be at 32bit.  Changing that solved the problem.  Go figure.