Playback video issues
Slow down a bit here. You say you got playback issues but then bring up encoding settings. Do you have problems with the encoding or playback?
If your colors are washed out then that might be a playback issue. Which GPU do you have in your HTPC? For some reason Nvidia will default (or at least used to) to limited RGB range (16-235 instead of 0-255). Changing that in the Nvidia control panel would fix it if that's the issue.
As for your encoding settings, roughly which x264 preset do you currently use? You only mention the number of reference frames.
Also, is there any particular reason why you use burn in subs instead of softsubs? They will look more worse and lose some functionality (like being able to replace or remove them).
Another question I got is, why do you encode your videos at all? Why not just play the original file? If you are ripping your DVDs/Blurays then I highly recommend you switch from average bitrate to constant quality, and then use something like the "slower" or "very slow" (possibly even placebo if you got a really powerful computer) preset. Your files will either look better, and/or be smaller. The quality should be more constant too.

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