The poor picture is likely caused by the source and is shown more clearly (as a "rainy" picture) on your TV. The same thing occurs with regular TV channels on a 27" CRT TV and a 50" HDTV. The large screen picks up, and shows, all of the bad signal being sent to it.
BTW- I certainly could be wrong so the way to check is to connect your TV directly without the splitter just to see if that cleans up the picture. I doubt it will but if it does then some other issue is the cause and can then be diagnosed and repaired.
is your TV capable for accepting HD signals ... jim is right ... same thing occurs with regular TV and HDTV ... i think you PC is capable for HD so you can see in that ... your TV is not support that one so its rainy