I tried it and didn't think it was better.. Wondering if anybody else tested it..
The default settings are 3 aren't they?
You have to be sure you have the latest drivers/firmware for both the hardware AND the Arcsoft software. Also, I can tell you that the turn on sequence can be a little finicky. I turn on my PVR but then instantly launch the TME software, before the hardware even gets a chance to stabilize. If still no love 20 seconds later , I then hit the refresh button in the software, wait another 20 seconds, and by doing all these things I just mentioned, I can get it to go 95% of the time. The other 5% requires me rebooting window 7 64bit. Hope this helps.
The fact that you've examined the signal coming in from the USB by an alternate means might have actually exacerbated the problem. From me weak understanding, the main problem arises from alternative couplings the TME software is sniffing for. It might turn on and say to the USB hub, etc. "Hey, who wants to hook up?" Incoming feeds that already have a partner are overlooked for "free" ones. For example, if you ever connected a web cam to the hub the software might be diligently just sitting there thinking, "OK, I see the 1212 already has an assigned partner, but I'm sure he'll be connecting the webcam for me to hookup with, any minute now. I'll just sit here patiently waiting for him to plug it in."
Sounds to me to be a ground loop. You would think they can't occur when everything seems rock solid, and recordings come out fine, and then all of the sudden, BAM, out of no where, you start to hear hum and see horizontal color bands (bars). The give away is if these bars scroll slowly up the image, which you didn't actually mention. Do they?
I would try quickly disconnecting, and then firmly re-seating, BOTH ends of all the various inputs and outputs on the Hauppauge. It could be a connection is simply loose or slightly corroded, and this procedure will hopefully restore the conductivity to that of a clean, solid, new connection. [With RCA connections, it is always best to apply a slight twisting action, both as you insert and remove them. This helps scrape clean the conductive surfaces.] Also, be sure your source device (cable box, sat box., etc), the HDPVR, and the computer are all plugged to the same AC power strip, which is then plugged to only ONE AC wall outlet.
[Ground loops occur when one of the devices sees two alternate ground paths. You want to be sure each one only sees one path, so this can't occur. It is unfortunately not just the power cords though. If for example you had a printer plugged in to a different AC outlet, and it to the computer through a USB cord, oddly, even though it wouldn't seem to have anything to do with the HDPVR and its recordings, the ground loop problem could be coming from it!]
I've never liked how when inserting the RCA plugs to the back, the entire board bends inward from the pressure of pushing the RCAs on (another reason why a slight twisting action can be beneficial, BTW). I once opened my unit and was aghast to see that the RCA jack pack is simply soldered to one of the main boards perpendicularly and has no dedicated support to keep it from putting lots of strain on the solder joints when pushed. This makes the delicate solder connections easy to crack, accidentally, including the outer shield which is a ground. This can cause hum and other issues.
Blockiness , aka tiling or macroblocking, especially noticeable when there is fast motion on much of the screen, is due to an inadequate bit rate. You may find that 8.0 MB/s is perfectly adequate for slow paced sitcoms or watching a fairly static image like a talking head give the news, but it gets into trouble for fast camera panning sequences or with a complex moving image, such as an action movies or sports. I would try 11 or 12 MB/s as a bare minimum for those.
Although it is always nice to conserve hard drive space, keep in mind that the price of external drives you can easily supplement your computer with and are easy to use via USB connection, have plummeted in recent years. Here's an example . Buy one and you can then record at 13.5 MB/s for 100+ 2hr movies.
As for using 720 instead of 1080i because your TV is natively 720 and that means hypothetically there is no need for the signal to be translated [transcoded] through a potentially image degrading scaler, I wouldn't worry too much about that [since you are still using a transcoding scaler actually, the one in the cable box] ; instead, ignore that advice and try using 1080i to see how the results look to you. Keep in mind that both the TV and the Hauppauge might need to have their settings readjusted for the new incoming resolution. On my TV, for example, the color/tint/brightness/etc. controls for an incoming 720 signal is an independent thing, even when using the same input port, compared to a 1080 signal, [although I don't know how common that is.]