I've had WEI cause a hang that needed a reboot when it got to the decode bit. After installing the latest ATI
drivers for my 3870 it still wouldn't get past this....so...I opened CCC and noticed that Windows 7 had set overdrive on by default so I disabled this. In-between I also opened windows media player for the first time and set it up. I also opened the test movies in win/performance/winsat/winsat and winsatencode and they played ok.
Ran WEI and it ran for the first time all the way through!
So, not sure which of these steps fixed it but it now works! I imagine it was either the overdrive or setting up WMP for the first time. either way am happy now.
Hope it works for you too!