Slade it could be a bit of both, but ultimately laptop CPU's aren't as powerful as desktop CPU's. The clock speed may be comparible to that of a desktop, but the raw power just isn't there in a laptop.
If you haven't installed any codecs at all, then I highly recommend going through and installing the ones I listed above.
The media players and codec packs (CCCP, etc.) that are out there aren't optimized for HD playback. HD playback can be a bit picky as if you get bloated packs and so forth, they've simply grouped together the most codecs possible so you can play the most formats, but then you have issues with optimization as these packs haven't had any optimization.
As for VLC, it is a good program, however Media Player Classic is completely stripped down and requires these external codecs to play.
I do suggest at least trying the codecs out and trying something like MPC (standalone player, no install needed) and seeing if it increases your performance.
My experience in the past I installed the CCCP codec pack and used MPC for media playback, and found half the movies were pixelated, etc. I uninstalled the pack and installed just the main codecs and it played back flawlessly.
ffdshow - http://sourceforge.net/projects/ffdshow/
ac3filter -
http://ac3filter.net/releases/ac3filter_1_63b - I suggest the full
divx -
http://www.divx.com/en/software/windows/divx
Recently divx now supports h.264 and MKV, etc. I believe you could get away with HD playback without installing CoreAVC Pro or Haali Media splitter, however if you do have issues.
Haali Media Splitter -
http://haali.su/mkv/MatroskaSplitter.exe
Core AVC Pro -
http://corecodec.com/products/coreavc
Now Core AVC Pro, I know you have to pay for, however I do believe if you get the installer you're allowed a 30 day trial with it. Of course there are other methods to obtaining Core AVC, but I assume if you're playing .mkv files and such you're well aware of how to find the Core AVC codec you're looking for
Anyways, give the codecs a shot, and try out MPC in conjuction with these codecs and see how your playback fairs. The codecs are fairly lightweight so it won't hinder any performance on your machine, it should hopefully just boost the performance with playback on your laptop.
Edit: Just as a note. the .mkv container and HD playback is still fairly new, so there isn't alot of packages that offer out of the box decoding for the .mkv container. It's possible that VLC has some codecs for HD playback, but may not have all the recommended ones.. But you can play 720p, so again it could simply just be an issue with the CPU lacking the raw power needed to decode a 1080p video, and the GPU lacking in the power to display a 1080p video