Wow, I was getting ready to throw the whole system out the window. The biggest key element is reverting to the 1.0.5 drivers, but there were other things I had to do as well.
Here's my story for anybody who cares to listen:
I am on Rogers in Canada and I was on a free two year rental for their HDPVR cable box, and it's ending in a month so I decided to get serious about dumping their sucky box which costs $25 a month to rent or at least $300 to buy.
So I went with the following: It's a bit overkill but I decided to build my ideal system.
Antec Fusion Remote Case
Asus 7M55 Pro motherboard Micro ATX
4GB RAM (which turned out to be a waste since I ended up installing 32 bit windows)
Windows 7 Ultimate (got it on an friend's employee discount so why not Ultimate)
Intel i3-530 (supports HD playback with its built in GPU, very power efficient). Decided to stay with stock cooler for simplicity.
Hauppauge HDPVR of course, I had a C1 unit, but I decided to buy a new E unit. The C1's were known to overhead so I didn't want to risk it. I can use my C1 unit for spot recordings in a different system.
I had a firewire/USB card from Monoprice which I will use with as my channel changer and it gives me a second controller to isolate my USB for the HDPVR
Corsair VX450 power supply for reliable quietness.
Rogers Scientific Atlanta 4250 cable box.
Samsung F3 1TB drive (gives me about 100 hours of HD recording according to MCE)
Microsoft eHome receiver to handle remote signals (my case has a remote receiver as well, but I decided to go with an external receiver to allow better line of sight reception)
All connected to a Denon receiver with HDMI which is my hub for all sound.
UPS to keep everything running through shoft power losses
I have the HDPVR connected to the cable box through SPDIF optical.
Here's everything installed. The computer is on the bottom. The top thing is a APC H10 power conditioner for my TV

Anyhoo, I built and installed the system, downloaded the latest drivers from Asus for my motherboard. Running Windows update I picked up the latest Intel Videocard/HD Audio driver as well. I made sure I used WIndows System image to capture my system installation so I can easily revert back if I screw it up with bad drivers etc.
I tried to set up the channel changer. Had a glitch there, my 4250 box wasn't supported directly even though I had the modified drivers set.
http://home.comcast.net/~exdeus/stbfirewire/I had to use the alternate commands for the FireSTB (-a4) for my Rogers/Scientific Atlanta box. Success.... it was working.
But it really didn't work once I deployed it onto full time duty. It somtimes won't record anything and I had to reboot/reset the HDPVR several times a day. I removed all other USB devides on the same controller and still it was very unstable. Then I decided to try this older Hauppauge driver. It actually went an entire day and recorded everything. I was getting worried that my $1000 worth of new hardware was an expensive experiment.
But all was still not well. I had set my Media Center to auto start when the system booted. For some reason MCE would lock up and I would have to kill the process. I turned off AutoStart. I trained my wife to press the start button if MCE isn't running
I also programmed my Harmony remote to send a Alt F4 command when the System Off button is pressed. That way, it would shot down MCE so that streaming can stop on idle automatically, so the HDPVR can take a break.
I took the opportunity to update my video/audio drivers to the latest on Intel's own site. It said there were newer drivers so I installed them. That was a disaster, it would lockup on playback when watching any prerecorded videos or live tv. I found the much older Intel drivers from my original install and installed those. Playback is much more stable know but still the video will freeze up for a couple seconds but it does recover now. I can live with this. Also, when skipping 30 seconds,the video is always garbled for the first second, which I can live with. Also, for some reason, when skipping, sometimes the sound goes very loud but it fixes itself if I skip again.
I also tried using sleep mode and see if it would resume properly. That doesn't work either for me....my eHome receiver on my USB card doesn't wake up properly. So now I leave my system on full time.
So there you have it, my system is actually usable but is still far from ideal. I wishthe sleep/resume capability works, and the video hiccups more than I like, but otherwise, MCE + HDPVR is a thing of beauty compared to my Rogers SA HDPVR.
thanks goodness that these older HDPVR drivers turned it from an useless heap of electronics to something usable. I just paid for dvblogic drivers and hopefully this system is here to stay.