The following did not make it into the User Guide, though it did get into the troubleshooting docs:
332121 Video Playback option in Audio/Video Out preferences (Encore DVD)
A new option was added to the Preferences menu of version 2.0 of Adobe Encore DVD. When you select Edit > Preferences > Audio/Video Out, you see an Automatic option in the Video Playback section. This option is selected by default, allowing Encore DVD 2.0 to play video in a Standard Direct3D mode. If the feature is not selected, then video playback will be in GDI mode.
The only reason to deselect this option is in the case of poor preview playback or black video. In order for the change in preference to take effect, you must close the Monitor panel and then reopen it.
Encore DVD 2.0 (unlike previous versions of Encore DVD) uses the Premiere Pro playback engine for video playback. Premiere Pro has three Desktop Display modes: Compatible, Standard, and Accelerated GPU Effects. In Compatible mode, video is played using the GDI. In Standard mode, video is played using Direct 3D. In Accelerated mode, video is played using Direct 3D with GPU.
The default setting for Encore DVD 2.0 is comparable to Premiere Pro's Standard mode (Direct 3D). When the Automatic option is deselected, it is comparable to Premiere Pro's Compatible mode (GDI).
If Adobe Premiere Pro 2.0 detects a Direct 3D error when previewing in Standard mode, it switches to Compatible mode. Encore DVD 2.0 does not have this capability, nor does it provide the same option in the User Interface for the user to switch between the three display modes. This is why the Automatic option was included in the Audio/Video Out preferences.