did you get this working yet? You should post your system info too, then perhaps someone with a closely matching system can test for you. Also, add some more info about the files involved, size and bitrate of original and the wma encoder settings chosen.
Then you will get a better comparison.
For what it's worth, I just encoded a 17 minute, 160 kbps mp3 to wma 320 kbps (no DRM) and it worked just fine.
Sys info...
Media Center Registered 10.0.27 -- C:\Program Files\Media Center\
Microsoft Windows XP Workstation 5.1 Service Pack 1 (Build 2600)
AMD Athlon 1609 MHz MMX / Memory: Total - 1048 MB, Free - 356 MB
Internet Explorer: 6.0.2800.1106 / ComCtl32.dll: 5.82 (xpsp1.020828-1920) / Shlwapi.dll: 6.00.2800.1276 / Shell32.dll: 6.00.2800.1233 (xpsp2.030604-1804) / wnaspi32.dll: 4.71 (0001) , ASPI for Win32 (95/NT) DLL, Copyright © 1989-2002 Adaptec, Inc. / Aspi32.sys: 4.71 (0001)
Ripping / Drive P: Copy mode:Normal CD Type:Auto Read speed:Max
Drive Q: Copy mode:ModeSecure CD Type:Auto Read speed:Max
Drive R: Copy mode:Normal CD Type:Auto Read speed:Max
Digital playback: Yes / Use YADB: Yes / Get cover art: No / Calc replay gain: Yes / Copy volume: 32767
Eject after ripping: No / Play sound after ripping: Yes Soundfile: C:\WINDOWS\Media\tada.wav
Burning / Drive Q: TDK DVDRW0404N Addr: 2:0:0 Speed:16 MaxSpeed:16 BurnProof:Yes
Drive R: PLEXTOR CD-R PX-W1610A Addr: 2:1:0 Speed:16 MaxSpeed:16 BurnProof:Yes
Test mode: No / Eject after writing: Yes / Direct decoding: Yes / Write CD-Text: Yes
Use playback settings: Yes / Normalization: None