After Effects can't even play a normal video

I rarely use After Effects to do serious effects, which is how I know something is not right...

Using Keylight on a clip and trying to watch it is painful... AE can't key something and play it back to save it's life.

OK, but the smoking gun is the play below which when I playback with no effects, After Effects still can't play!

How can this program be effective when it can't play back one h.264 video play all by itself!

Any video player on Earth can do things After Effects can't... I will sometimes hit the space bar 4 times or so just to get the timeline to start to play before it lags and freezes after a few seconds.

So After Effects can't play one layer... it's unusable! How can anyone accurately create effects and preview their timing in After Effects?

It's not possible; even simple compositing with a green screen and video underneath has the program stretched to it's limits,

ONE layer of h.264 video has the program stretched to it's limit!!!!!

What does Adobe have to say for itself? I know ACPs on here will tell me to re-encode all my footage all day long (Adobe like footage containers no one uses, it's a big secret on here apparently). This is one h.264 clip about 4 minutes long... After Effects cannot play the layer without lags and freezes.

Anyone know of a free program that works better than AE? It has to be out there.