To make matters worse, now I cannot play ANY blu-ray titles anymore. I encounter the same upgrade popup which did not exist just prior to playing Transformers. It seems like the software has been disabled for all blu-rays. DVDs continue to play OK.
I guess I'm hesitant to upgrade PowerDVD because I was having no issues with 2217.50, so first I tried restoring the system. Fortunately I had just taken an image of the hard disk, so I was able to restore the entire system without too much effort. However, even after completely re-imaging the hard disk, this problem persisted. Then I experimented by switching to another blu-ray drive of the same model and that actually fixed the problem.
I will eventually upgrade to 8.0.3228, but for now I'm scratching my head about what happened. It seems like the new Transformers blu-ray caused PowerDVD 8 to disable all blu-ray playback (AACS key revoked?). But the flag that PowerDVD uses to disable it is actually stored in the firmware of the blu-ray drive? Does that make any sense? Has anyone else encountered this?