Though if these were encrypted video files and using say a Blu-Ray disc, this likely wouldn't be possible since the processor would have a very hard time keeping up, but anyways Linux is currently lacking such a player.
Yes, currently open-source world lacks fully integrated player.
But in practice these are no obstacles at all:
Several open-source tools exist to decrypt AACS.
For the minority of Blue-Ray releases having BD+ there is libbluray.
There are also modified firmwares for some popular drives to access the full media without key exchange.
Much of the relevant information and the history of hacking can be found at forum.doom9.org / Decrypting.
The file-system is UDF2.5 and supported with kernel-2.6.26+
Video files are *.TS. These are standard MPEG transport steam and readily playable with mplayer etc.
(There is also recent support of those various HD audio codecs now.)
So there isn't much stopping from watching Blue-Ray (or HD-DVD) on linux.
(And these will work also with this low-end setup, because all decrypting is made before playback.)
I bet there already is automated script to do this all with single click ...