Let me see... I can't find that "System Settings/General/Look and 
feel/Appearence" menu, remeber however this is KDE and maybe your are talking 
about Ubuntu on Gnome.
Under System Settings/General/Appearence are many, many options which don't 
seem to be related, nor I do think they are causing the troubling here (Widget 
style is Oxygen, by the way).
But...  under "System Settings/General/Look and feel/Desktop/Desktop Effects" 
is the plugin I signaled before (good shot!).
I disable "All desktop effects", Apply, and...
bingo! Now I can watch video streams without the gray squared area appearing in 
front of everything (however with effects turned-off, obviously).
The effects I had active were:
-Zoom
-Logout
-Present Windows
-Dialog parent
-Login
-Minimize animation
-Shadow Translucency
-Fade
-Box switch
-Desktop grid
-Taskbar thumbnails
...and the rest were inactive.

There is yet another observed behaviour which may be realted: when I switch 
user X sessions and go back to the one that raised the gray square, I can't get 
to see the login popup. It is there, however it does not show (screen is all 
black). Sometimes the user/password fields blink there for half a second, then 
they go away. The login popup is there but no key I press gets to show it.
Typing some arrow keys and my password blindly I could fortunately log in (I 
had some work ongoing on that session and restarting kdm was just not 
acceptable). Login fields look good when I try to switch to other user X 
sessions without the problem.

-- 
Gray square overlaps top-left corner when opening an Mplayer+FireFox3 stream in 
Toma Internet TV
https://bugs.launchpad.net/bugs/262172
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