Something about the steps still leaves a weird taste in my mouth because this did work before SP1, and the MPEG-2 codec and corresponding filters should have worked after the SP1 upgrade. Why I had to load some 3rd-party codecs for this scenario is still a little puzzling.
If I get a chance, I might restore the image from my Windows Home Server just before the SP1 upgrade and try it again... or I might just leave it alone. If it ain't broke, don't fix it... right?