I too have run into this same problem since yesterday, Feb 28th.
Without doing any updates or changes I had been running PDVD11 3318 successfuly since it was released months ago and all of a sudden the software resets region to zero so can't play any discs. Uninstalling, running the cleanse program and re-installing up to 3318 did not help. Back to the same problem. You can see that the program connects to the internet as soon as it starts and pauses for a while then when you check blu-ray region code you see it back to zero right away.
The only thing I've found so far is that if I uninstall, cleanse and re-install only up to version 2024 it seems to run without resetting. This is only today March 1st so not sure how long it will last.
I also have PDVD 12 as well on the same computer on another partition and it has been so buggy that I refused to use it until new updates arrived. Up until yesterday I was content to keep using PDVD11 until version 12 got better.
What was strange is that on the same day, the 28th, I decided to try version 12 again since version 11 was dead in the water, I discovered that version 12 did the same thing. As soon as I started it, the region count went to zero. This issue had not shown up on V12 yet. It's obvious that these programs always go to the internet home servers whenever they start up, probably to check on new security keys but it seems that it's affecting region codes as well. Only saving grace is that a few days ago there was a new update to version 12 with 2428 and that seemed to reset the region code back up again to 5 after this happened.
This is an old problem with POWERDVD. I had this problem happen about a year ago in JAN 2012 with exactly the same problem on version 11 and opened a ticket with Cyberlink but after putting me thru hell gathering them data, I never received a response from them on this problem. I gave up on them and was then forced to re-install my operating system, Windows 7 and POWERDVD 11 as well. I'm not going to thru this again with them.
I realize that this thread is for version 11, but the key reason I stopped using version 12 and gone back to 11 is that version 12 aborts constantly when playing back high resolution audio tracks such as DTD-HD MA or DOLBY TRUE HD audio tracks. Originally this was thought to be related to using INTEL HDMI audio, however when I went to an NVIDIA HDMI audio card with different driver and discovered the same problem, I pretty much gave up on it. This was to be fixed in this latest version 2428 but it's not. The problem is still there. I have now given up on the software and considered the upgrade a total waste of money.
If the region reset problem on version 11 continues and does not get fixed, I will also be yet another customer that switches vendors and will never come back. I have spent a lot of $ with Cyberlink with versions 7, 8, 9, 11 and now 12 and have had a lot of grief along the way. I will not continue to spend $ on a company that basically destroys what should be a real enjoyment of movie watching thru a computer.