gadg17 - Glad I'm not alone. Have made some findings regarding the audio sync problem. First, my box is the AML8726m Cpu - c03ref. I downgraded to Gingerbread 2.3 using the Uraku FW for their model T1 - it needed to reboot a couple of times before everything was smooth, but it did improve on the audio sync problem. Next I analyzed the files that were giving me a headache and they were mp4/avi files, the worst of which used VBR audio streams. It seems the hardware on this unit does not deal with these streams well. However after switching to 2.3 and then using the software drivers of MX player the audio sync was restored with these problematic VBR files. The video response is also considerably smoother since I shifted back to 2.3.
Regarding XBMC - how will we know when it is optimised for this box? I'm interested in it too, but I don't want to brick my unit after I finally got it operating well.