I have the same problem. Though, I remember reading something about FM on hybrid cards not being supported with the TV server, but also recall others having it work, so not real sure.
Internal engine is probably the best way to go unless you have other clients that u wish to watch TV on, and then ideally u would have a dedicated server. In my case I am going with TVengine2(the internal one) for my main HTPC, and going to give TVServer one card in my media server, so that I can watch live TV if required, on other desktops. I was hoping that the TVserver would enable clients to share cards if they wanted the same channel, but this is not the case and recording requires yet another card, even if you are streaming the same channel, so no real advantage I can see.
VJM, how was your audio/video sync with 0203 and v1? I found 0203 drifted a lot on particular channels. With version 1 I get all channels OK only if timeshifting is on. I am in Sydney, where do you get your broadcast from?