It's all down to the video codec you select, which will either do it in software or offload it to the GPU (eg, ATI's vector adaptive processing or somesuch). So you need to be looking in the settings for the codec and/or your graphics driver to ensure it's turned on.
Its not a setting NPVR would have. Its either the decoder or decoder+renderer that take care of deinterlacing. Most combinations do it automatically, but some decoders have settings that allow you enable/disable deinterlacing, or in some cases set the deinteracing method.
ArcSoft Video Decoder
MainConcept (HCW) MPEG-2 Video Decoder
Microsoft DTV-DVD Video Decoder
Cyberlink SAC Video Decoder
All but Microsoft allow me to go to their settings when clicking the ... button to the right. Only ArcSoft and MainConcept have an option for deinterlacing video. I set both to auto.
Now for whatever reason, ArcSoft shows me no video on Live TV. MainConcept seems to work fine, but things look a little too narrow. I hit F7 to get to the correct video ratio, but it doesn't help.
Quote:Now for whatever reason, ArcSoft shows me no video on Live TV
This fairly normal for ArcSoft decoders. For example, some installs of WinTV ship with the ArcSoft decoder. It shows up as being available for H.264 and MPEG-2, but because Hauppauge is only licensed to use it for H.264, it does nothing for MPEG2. It would have been nice if the decoder didnt claim it was capable of MPEG2, but it doesnt.