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I figured out the problem with my setup, hopefully you have the same issue and this will fix it.

It turned out that for some reason Windows Media Player was running in the background. I think this is because I had media sharing turned on (library tab in WMP options). I ended the wmplayer process and Voila! PowerDirector works like it is supposed to.
I have the same problem with a very similar setup. I emailed Cyberlink and they told me to disable UAC. Of course that didn't help anything. If you'll notice their solution for everything is to disable UAC.

I emailed them a second time and haven't gotten a reply.

I'm glad I'm not the only one with this problem. I was starting to worry that I had some serious problem with my PC.
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