Just wanted to say thanks. Very strange but the problem is fixed.
I plugged the drive back into the PC last night and had the same problems in Win7. So I pulled out an old install disk, changed the boot priority, and what do you know it worked! So I figure it must be something strange with my Win7 install on that PC which I admit is a bit of an unorthodox installation (OS on SSD, Users/Program Data moved to HDD RAID1 drive using unattended install, OS customized and trimmed of many features I didn't need at the time like WMC). So I hooked it up to a different PC with a standard Win7 installation and everything worked. So I figure, it must be a Win7 installation issue, I'll try those links you posted to see if it solves it. So I plug it back in, boot into Win7, getting ready to install the fixes, but then I notice that the disk I had in the drive was magically working! I was able to rip bluray disks in like <25 minutes and was very impressed.
So again I just wanted to thanks for the test idea. Saved me a bunch of time trying to RMA something I didn't have to. I'm going to keep an eye and try to use it a lot this weekend to make sure it doesn't act up or anything.