SD on the PC client is Microsoft VC1AP running at 1750 Kbps for video. The resolution is a tad low, and Silverlight has a very poor quality upscaling filter (it's not bicubic, so it can look a bit pixely). That's high enough to generally avoid any artifacting, although there can be some detail loss in high motion scenes. Netflix is variable bitrate, though.
Then again, VC-1 has in-loop deblocking, so like h.264 you'd never see blocking artifacts anyhow.
When introduced, VC-1 was only slightly worse than h.264, but since then, VC-1 AP was defined that makes it a heck of a lot more similar to h.264, and also h.264 encoders like x264 have gotten enormously better.--
Developer: Tomato/MLPPP, Linux/MLPPP, etc »fixppp.org