ummary: Hauppauge WinTV 950 USB HDTV tuner lets you watch wonderful HDTV broadcasts on any PC, and can record the shows directly to MPG files. However, for whatever reason, can't open these MPG files for editing/encoding to MP4!
What is true is that the Hauppauge line of HDTV products, not limited to the 950, saves the TS stream to a MPG file, and modifies it by adding extra 'header'/'information' to the front of the file that causes this problem. Others have reported this information for other Hauppauge products in http://www.shspvr.com/smf/index.php?topic=10444.45
The fix is to eliminate the first 'broken' part of the MPG file. A hex editor is not needed as posted below since I've found a very easy to use program called MPG2CUT2:
To use, simple open the MPG file, go to the beginning of the clip area by using << or <, then click [ to mark the beginning of the clip. Do the same with the end of the clip using > or >> to go to the last i frame, then click ] to mark the end of the clip and finally click the + button in the toolbar, then save the CLIP you've just created as a new MPG file.
Problem solved! You can now open and edit this MPG file in any MPG-capable video editor, including VirtualDub MPEG. (Naturally, the audio is in AC3 format, so you'll have to extract it using a program such as Adobe Audition, then save it as a WAV file so you can then open it and use it in VirtualDub along with the MPEG file above to encode into Divx/etc.)
Unfortunately, Hauppauge has not yet fixed this problem on their end, so all TV recordings made from their products will continue to have this problem until they've made changes to their recording software.