I experience the same annoying behaviour as cumulus31. The image is "flickering" for a split-second before it zooms - you can reproduce the bug by blinking every time you zoom in/out an image

I've just upgraded to 1.95.4 from an old version (1.80 if I remember correctly) that didn't exhibit this kind of fullscreen zoom-related problems.
I have WinXP Pro SP3.
[case analysis]
I get it only when I move to Fullscreen from Viewer. If I pick an image in the Browser mode and hit F11 or click on the pretty picture on the taskbar, I can zoom in, out and around just fine.
Zooming in Viewer and preview in Browser works fine.
I've tried different settings in General > Keyboard/Mouse > Switching modes
B - Browser
F - Fullscreen
V - Viewer
B > F > V
B > V > F
produce the unwanted behaviour.
B <> F | V <F> F transitions are broken.
Yes, I also think that B > F > V should be working fine, but it somehow isn't.
If you push Num1 in Fullscreen a couple times you get pretty ugly flickering (I think this is the easiest way to check which setting produce this unwelcome behaviour).
[suggested fix] / not really a fix

/
For me choosing starting mode as Fullscreen - Browser avoids the problem, but it still exists. You can find this setting in General at the very bottom.
It also takes a bit longer to show the image this way.
[the rest]
I don't know if it can be mitigated by some change in the options, I think I tried everything, but I might be wrong. Setting the background (in Fullscreen) to white helped a bit - especially if the image you're zooming is mostly white - but the problem didn't go away.
Using hq zoom makes matters worse because it takes longer for the image to be zoomed, and the flashes across the picture are more pronounced.
I work with jpg, gif (still and animation) and png files - all of them exhibit such behaviour (so this isn't file-type related I guess). The bigger the files, the worse it looks (it's not a technical point, just the perceived change from bad to worse as the files are bigger or more zoomed in i.e. cover more screen).
Renamed xnview.ini to .bak - default settings are of no help, the problem still lives.
I even uninstalled XnView, restarted cpu and installed again - didn't help.
Rebuild thumbnail cache - done that, still nothing.
Zooming w/ mousewheel doesn't help.
[the end]
If you have any questions, need more info or have any suggestions - you are all welcome.
And the usual excuse for misspellings etc.: it's the middle of the night where I live, so please, point them out, but bear in mind that I'm old, my eyes are weak an so on
Karol Blazewicz