Alright, I downloaded the trial, made a temporary Zune Pass account and yeah, it does indeed work.
It appears to be a bit slower than I remember, perhaps now they HAVE to record the file? Like
Tunebite, it actually does install its own proprietary driver. When it's doing the actual conversion, it uses some "Media Protected Framework" by Microsoft, I don't see a WMP running anywhere, so I'm not quite sure how it works (and since it's not free, perhaps that's the idea?

)
The trial only lets you do up to 90 seconds, which is a bit annoying. I actually did pay for the software back in 2006, but I seem to have lost all my emails from back then so I can't find my serial
Maybe someone here wants to buy a copy and license it to "Stream Recorder Forums?"
So yeah, I definitely recommend using
Soundtaxi - just go into settings and tell it to use 320kbps instead of 170ish, and you should be set. It claims to be able to convert videos too, I haven't actually tested that out - but if it's anything like Tunebite, it actually plays the video and records your screen, it's just automated, quite a waste of CPU if you ask me.