I've got the HDX995 - which is in essence exactly the same (although it looks a bit different externally), and I havn't had a problem with it playing Region 2 discs at all. In fact my only issues is the way the hard-drive keeps spinning (thus wearing it out) when your watching something on the tuner, and the fact that the tuner isn't the most sensitive ever.
Since mine isn't multi-regional, I can't comment on any any problems the Sony might have. However, I know from experience that my rather old (8 years) Eltax DVD does have problems with some Region 1 discs, even though it was bought from Richer as a multi-region machine (yet the same discs would play on someone else's multi-region machine).
If the occasional Region 1 disc won't play because the machine is a bit twitchy, then thats not entirely unexpected, although annoying. But the machine should play Region 2's. That said, I did get some discs which were Region 2/5 (they were from a Hong Kong based site which Nectar used a while back). Half worked, half didn't. So if they are like that, then there may be a problem.
If the discs are clean (an alcohol solution cloth, wiping from centre out) and you've checked that its not just those discs (it happens), then it might be the firmware. Sometimes the updates don't work, or you've got an old one. If not, you've possibly got a crook machine. Obviously have a look at the Sony site first Forum & Communities: Community: DVD, Blu-Ray & HDD Recorders - the forum looks useful, and have a look around Google - there's a good chance someone else had had the same problem. If still no joy. then take it back to the shop (if you can), and ask them to have a look at it.
It depends on the customers needs. From what you say, you are the sort of customer who 'records, watches, wipes'. The ability to archive to a disc is great for me, but something you say you only use rarely.Is it better to buy seperate home entertainment equipment rather than my one box does it all strategy?
I'd probably suggest going down the Humax route, which is simple to use, reliable, and gives you HD Buy Humax HDR-FOX T2 500GB Freeview+ HD Digital TV Recorder online at JohnLewis.com. Not the cheapest (although its the same price as the Panasonic equivelent to your existing machine! ), but I hear terrible things about Philips, Sagem we don't really talk about and I never mention Sharp. The Digital Stream gets mixed reviews, but is cheaper Buy Digital Stream DHR8205U 500GB Freeview+ HD TV Recorder online at JohnLewis.com, and customers seem to hate the Samsung (although it just one a major award), but really like the Freesat version. I like the Panasonic model, which is £229, but it does have a smaller hard-drive (320gb).
You can buy them all in one. Panasonic's version (which has a recording Blu-ray) is over £400. Its nice for someone like me, but for you, I'd recommend a decent HDD (the HUmax does DLNA and you can extract data from the drive - unoffically) and a blu-ray. You can crack your 'cheapo, no name' DVD and make it multi-region, or just buy one (about £30), but I'd go for Blu-ray at some point. You can buy multi-region ones (be warned that Blu-ray regions and DVD regions are not quite the same) for about the same as the Region 2's. The excellent Sony S380 does everything you'd want (including going online, stream, Iplayer, etc), and we're knocking it out for £119. Have a look around, and you'll find it in multi-region as well for a similar price.
Start with the HDD. If the current one is dodgy, you can then upgrade to one with HD Freeview with no worries about spending more than you want. The Humax (and possibly others) will allow you to stream and get Iplayer. You can use your existing DVD (crack it by using the codes you'll find on DVD Reviewer - Multi-Region Hacks, and hopefully watch your Region 1 DVD's. If you want to upgrade to a blu-ray, then Sony, Samsung or Panasonic will all be fine. Have a look at AVForum, etc for recommendations on the various machines, including your existing one.