This bug is very easy to reproduce. I'm watching a S-VHS PAL input using "File->Open Device->Nvidia WDM Video capture universal DirectShow" (6600GT).
*** However, my COUNTRY choice (PAL) is IGNORED by MPC 126.96.36.199 and the boot setting (NTSC) stays unchanged ***
The end effect is a corrupted image: it is scrolled down a little bit and the bottom lines are lost.
As a comparison Virtual Dub 1.6.9 or 1.7.5 is able to switch country back and forth without any problem. Since the country setting is persistent, virtual dub can even be used as a inconvenient workaround for this MPC bug...
I'm using a 6600GT VIVO with Nvidia driver 188.8.131.52
I'm available for more details or more testing.