Hi Rytdim.
I've had similar probs with videolan and my PVR-350.
After much cursing and hairloss I yanked the card from the machine and installed it in another box I had using drivers fresh from the hauppauge homepage and from
http://www.shspvr.com.
Then it simply worked, right away, no transcoding or anything.
Direct mpeg2 from the card into vlc and it ran like a charm, both local and streaming.
After cleaning *all* hauppauge drivers from the other machine and installing the fresh drivers it worked fine on that box as well...
Having the latest drivers is of absolutely paramount importance with the Hauppauge cards. Do not use the crap that is on the CD.
In addition The WinTV source selector (wintvsel.exe) is a very good app for tweaking audio and video source settings without bogging down with the horrid winTV2000 app.
Hope I have been of help.