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What causes the "Key exchange for DVD copy protection failed" error?

There are several reasons. The first may be an improperly installed version of DirectX. Installing the latest version is the first step.

Another popular reason for this message is that you have some 3rd party program running in the background, which is interfering with drive access. Common programs are DVD Background program (region-free and such) and CD/DVD Packet Writing drivers that may come bundled with CD/DVD Burning programs such as "RecordNow", "Nero" and "Easy CD Creator". You may be able to disable these programs' interference within the DVD Drive's property page.

Here is a direct quote from a user who resolved this issue:
"I have or should I say had a copy of Stomps RecordNow installed and like Nero & Roxio they have their own packet writing software called DLA. I wasn't even aware it was on my computer. there's no system tray icon. The only way you know is by opening the properties of your drive or if you right click on the drive there will be an option to enable or disable DLA. I disable the sh.....t and uninstalled and I have Zoom Player back. Something you might want to remember because I'm sure someone else is going to run into this same problem. Thanks"