I don't know if ZoneAlarm was the actual problem but i did two things and then timeshifting started working:
1\ Went into ZoneAlarm-> Program Control -> Programs
Found the "Generic Host Process for Win32 Services" and changed the 'Trusted' and 'Internet' boxes under 'Server' to 'Allow' (both boxes under 'Access' were set to 'Allow' but the others were set to 'Deny').
2\ Also under ZoneAlarm-> Program Control -> Programs
Found MediaPortal in the list, right-clicked the icon -> Properties -> Security tab then set 'Full Control' for every Group/User name in the list.
Take your pick!
EDIT: Actually the proper solution was to uninstall ZoneAlarm completely as the problem comes back after restarting the PC (even if ZoneAlarm isn't running, the TrueVector monitor still runs in the background)..
I've got pretty much the same issue. As soon as I start to time shift, the picture dissappears (but not the sound). When I turn timeshifting off, the picture comes back.