Yesterday morning I tried the following:
1. I backed up MC library, uninstalled MC, rebooted, installed MC, restored library, MC restarted itself but there were missing things from my library and things I had deleted long ago and settings that were not right... So I restored from a backup that I schedule every morning at 3AM and everything was back, except thumbnails which took almost three hours to rebuild.
2. Clean install of the latest nvidia drivers. Restore my nvidia driver settings. Reboot a few times.
Shut down the system last night, got up today and fired it up, theater view is there full screen, go to guide, play a tv channel, and I get the same thing - video drops to a small window in the top left corner exposing the desktop and showing the tv channel info down near the windows taskbar. Stop video, theater view is back full screen, use my MCE remote to EXIT into Standard View, then press Green Button to get back to Theater View, working fine again.
Mystery remains. My guess, it's something to do with JRVR and/or dual displays. Main display (used for MC Theater View) goes through AVR to Tv, while second display (used for rain meter) is direct connect to small screen lcd.
Next, I'll try disconnecting the rain meter display before shutting down. See what happens the next morning at power up.