The only way I was able to get it working was to do a clean install of the OS. Before installing any app software or any updates, I would create a restore point so when it broke, I could restore and trouble shoot. However after every test of XM after an app install or update, it always worked.
I have been able to duplicate the problem. Still don't know how to fix it, but I believe I know the cause.
It seems that if you launch a file that requires WMP to run, if it is the first time WMP is launched, it goes through a couple of pages of setup. This is when the XM app gets broken.
If you launch WMP for the first time by clicking its icon as opposed to clicking a file that is associated with WMP, and go through the setup pages of WMP everything is fine.
I have SP1 installed and my XM app is still working. Somehow, if WMP gets launched for the first time by clicking on an associated file, that breaks the XM app. If you manually launch WMP for the first time and go through the first time setup it does not break the XM app. It must be a WMP setting somewhere but after hours of changing WMP settings, I never got it to work once broken.
Like I said, I haven't been able to fix it once it is broken, but I believe the above is the cause as I have been able to duplicate it several times.
By the way... In my search for a solution, this problem is wide spread. There are several members of several forums reporting the same problem. I did have a ticket open with MS but none of their suggestions worked so I eventually formatted my boot drive and did a fresh install of the OS. Since then, the ticket was closed as unresolved.