Not only should it do what you want, if you have enough tuners it should do it very nicely. That is, it should record the first episode with its padding before and after the show, and separately record the second episode with its padding before and after the show.
The way MC handles back to back programs is one part of the MC TV functionality that I really love.
Not to take away from MC, but that's how padding should work and there should be a clear definition of what happens when there aren't enough tuners to perform the requested padding. One option would be that the first recording or the one with the highest priority gets the requested padding and the other recording gets truncated accordingly. Another option would be that no padding occurs so the first recording ends at the scheduled time and the 2nd recording starts at the scheduled time. But the important thing is for there to be a clear understanding of what to expect, so you can make an informed decision as to whether you should add more tuners or not.
Padding was actually one of the (minor) annoyances with Windows Media Center at first. With Windows Media Center, padding doesn't work as one would expect on back to back recordings on the same channel UNLESS you tell it to add 10 (or more) minutes of padding at the end of the show AND don't select the "when possible" options. If you select fewer than 10 minutes of padding, or choose any "when possible" options, it will (IIRC) stop the first recording on time and start the next recording on time so that it can use the same tuner for both without writing to 2 files at the same time. It's either that or it starts the 2nd recording late and pads the first one. But something along those lines. The really weird thing was that back to back recordings on different channels DID handle padding as expected even when using the "when possible" options, so some shows recorded with the expected padding and some didn't. When I first started using Windows Media Center, that "feature" drove me up the wall until I figured out what the trick was
. Once I figured out what was going on, I just setup all my recordings to end 10 minutes late (and not the "when possible" option). I usually setup shows that are often on after sports to go an hour over just to be safe (I've had been cases where even that isn't enough).
I should definitely have enough tuners. I've got 2 Ceton InfiniTV 6 ETH's and 2 SiliconDust HD HomeRuns, which gives me 12 CableCard and 4 OTA tuners. Even sharing them across 3 PC's now, it should be a pretty rare event to not have enough tuners.