Whenever someone has a computer that they acquired from someone else that isn't working properly, my first thought is that the computer has some form of electronic herpes that has previously gone unnoticed. You mention a fresh install of Win 7. Who put the fresh install on? You, or them? When did Win 7 get installed? How much has the machine been used since then?
I don't need the answers to those questions, but you need to think about them. You sound as though you're ruling out the possibility of malware, when perhaps you shouldn't. Run a few diagnostic tools on your computer to check. Someone more qualified and knowledgeable about such things than I can provide you a list. This should be done on a regular basis.
You also need to check Windows Updates. If it's truly a fresh install, that means they haven't been run. You could be encountering a bug that Microsoft has since fixed, and you just haven't run the patch to fix it. Check the optional updates and look for things that address video packages. You should also update Java, and check video codecs. The problem you're describing sounds like your computer is lacking something to decode the incoming video stream. It runs fine for a few seconds until it gets a piece of data that it doesn't know what to do with, and then everything falls apart.
As far as the machine and the hardware, most of us were watching streaming video several years ago on computers that weren't any burlier than your little netbook. It has the guts to do it, but something is feeding the machine improper instructions.
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