Decided to try a fresh windows install.
Specifically windows 8 pro x64.
After installation of windows, chipset driver, sata driver and video driver, I installed pdvd 13 ultra. Playing a BD disk was flawless.
I proceeded to install all currently available windows updates and a few other utils/programs. Not sure which broke it, but afterwards, blue line was back.
So it appears to be some issue between pdvd and one of the windows updates. I have some 62 updates installed. It would be quite a pain to install each one individually to determine which broke it.
I'm still waiting to hear back from support to see what they come up with. Last exchange the rep wanted to have the dxdiag.txt output and model of tv. The latter being irrelevant as this issue is present with a dvi connected monitor too.