If you're playing SD videos, then anything under 720p should be fine. For the Quality setting, it's usually best to leave this at 100%. It's useful if you are connected to a 1080p monitor and can't change the dimensions, in which case you would lower the Quality a little. You can see the effect of the Quality control on the Info window - as you move it you will notice that the Pipeline dimensions change (to be a portion of the Output dimensions).
