Well, I ended up buying one of these remotes:
I can confirm that this remote plugged in and worked perfectly! To add insult to injury, when I use my origional Microsoft remote with the Hauppauge receiver, it too works perfectly.
I can only conclude that the MS receiver and / or drivers are causing the issue.
From all the reading that I have done, I have seen others with exactly this problem, and others who supposedly have the same remote and receiver perplexed as to why it isn't working. This thread, like all the others I came across will give no solution... frustrating really.