I had a similar problem after I installed a new audio card so I would have a toslink audio output. Immediatly after I installed the new cards audio drivers and rebooted the system my computer would "hang up" constantly when playing HD DVD`s and eventually lock up the computer. It would then crash and leave me staring at the "blue screen of death". After reboot it told me that there was a problem with the systems drivers"
I unistalled PowerDVD and my audio card drivers from my system. After I rebooted the system, I reinstalled the audio card drivers and tested the audio card to make sure I had analoge and digital output. I then restarted the computer and reinstalled PowerDVD and upgraded it to 7.3 ultra. Problem fixed. I still try to be carefull when using PowerDVD while watching HD DVD`s. After watching a movie in full screen mode, when I want to close PowerDVD, I perform it in this order. Press stop on the player. Minimize the player, then close player of select another movie to watch. I never change the audio configuration "analog to digital" while the movie is playing. This also would cause the program to crash. It seem that when I installed PowerDVD last after installing the audio card and drivers, all my playback problems are now gone completely. Good Luck