That doesn't sound like a bad conversion but more of a DRM issue, some cable companies send video signals to certain premium and movie channels, I'd check that to be sure.
PS: You CAN filter out the signals before it reaches Media Center by adding a filter such as in the link below to the -SVideo or component/composite video connection. This is how I record premium and movie channels and never had a problem.
Link:
http://www.xdimax.com/grex/grex.html