First off, you have an OEM computer. You are not entitled to ANY support from MS so don't complain (read your warranty). MS does not provide ANY support for OEM's. Never has, likely they never will. That's the OEM's job because they modify the hard and software to THEIR specs, not MS's.
You can upgrade to Ultimate from ANY edition of XP, period. They weren't truthful. I have access to the MSKB, and see no documented issues with Media Center installs at all.
You didn't mention if you ran the upgrade advisor, sounds like you didn't though. It defintely would have told you about the conflict with Media. I did, it detected the issues, I uninstalled the programs and had no issues (same program too!)...
You called HP (you get what you pay for). They were no help (go figure), so you called someone who you were not "entitled" to call in the first place(you're lucky they didn't charge you for the call. They CAN do that if you dont have Vista INSTALLED and can't provide a valid PID number).
Boo Hoo Hoo. Hp's problem, not MS's. Sorry. Right? You're stuck. There's hope though.
Here's a couple ways you could fix the issue. If you want to fix XP, get to a cmd prompt (you can get to a cmd prompt by booting off of your Vista DVD by hitting Shift+F10 while in the Windows Recover Environment) and do this:
navigate to the \system32\dllcache\
Copy framedyn.dll from system32\dllcache\ to \system32\wbem\
Very likely it was corrupted either by you shutting your system down forcefully (Shame on you. Check your processes first) or a kernel error.
You didn't mention if you have an "upgrade" or full version (I'm assuming upgrade because you mentioned missing files and a "clean install" or full install could care less about missing legacy OS files). Doesn't matter. They are exactly the same. MS just doesn't tell you that, so I hope you saved several dollars by buying the upgrade. You can do a full install off an upgrade disk by doing this (note: backup your goods using the xcopy or robocopy functions in the WinRE cmd environment if you have stuff to keep i.e.-> xcopy c:\"documents and settings"\"Your User Name"\*.* <backup device drive letter>:\"documents and settings backup"\
1. Boot to the Windows Vista DVD
2. Start the setup routine by clicking on Install Now
3. When prompted for the product key, do not enter a product key and click next.
4. You will be prompted to confirm that you wish to continue with the install without entering a product key. Click on No, to continue.
5. When prompted for the edition of Windows Vista, select the edition corresponding to your Windows Vista upgrade product key.
6. Continue with a clean installation.
7. Once the installation has been completed successfully, restart the setup routine within the Windows Vista. This is also known as an in-place upgrade.
8. When prompted for the product key, enter your Windows Vista upgrade product key.
When you are DONE installing, you are then MS's issue, not Dell's. You WILL need a PID though. Dell won't help you any longer, even for their hardware, and they won't be shy about telling you that. Just setting expectations... Good luck!
I will gie you a chronology of events as objectively as possible:
1. As I headed for bed my Pavollion Media Center PC informs me that there are updates to process so it will complete them and turn off the PC.
2. I come down in the morning and the update has hung and so has Windows.
3. I physically hold the poewer button in and tirn the PC off
4. After many gyrations I discover that there are a bunch of system files missing. The only one referred to specifically - framedyn.dll
5. In desparation I try to install Windows Vista Home Premium which I just purchased
6. It fails due to missing files
7. Reboot - hit HP's restore function F10 on reboot - nothing happens!
8. I call Microsoft Vista support
9. I am told that it is impossible to upgrade to Vista Home Premium from Windows Media Center. I must purchase Vista Ultimate
10. In shock I ask for a supervisor. He validates that I can't install Vista Home Premium from Media Center. We continue trying.
11. I read a message that says framedyn.dll is missing. They immediately stop and say sorry we are ending this support call and will not continue until I get my copy of Windows Media Center fixed.
12. I call Microsoft support again and ask for Microsoft Windows Media Center support.
13. I am told that since I bought Windows Media Center installed that I must ca;; HP for support/
14. I amm told my support year ended in January! I argue that there is no file on my PC before May 13.
15. After I express my disbelief he demands a gaxed proof of purchase.
16. I tell him there were 2 PCs. The first one had a cracked motherboard and was replaced by the current machine on May 13. I am quickly ushered to a technical support person. He goes through a bunch of things and finally resorts to asking if I have tried F10 on bootup
17. He says I must do a destructive install using my CDs that I prepared when I got the PC
18. I ask him what do I do if it fails or the CDs atr not good. He says I can buy a set of CDs for $27 and I will get them in 5 to 7 business days.
19. When I ask if there is any other way he says that if I have a Wondows CP Pro CD I can do a bon-destructive restore from it to my Windows Media Center installation.
20. He says I can purchase the XP Pro for $199 but I should note that I can use it on lots of machines.
21. I sleep on it.
22. I realize that I have XP Pro on a second computer so I call support.
23. I am told that they do not support this procedure and that they can't help me.
24. I get angry and she reacts.
25. She asks me in Windows media center to try an HP restore to do a non-destructive restore - effectively an F10 from windows
26. It works! sort of ... We try about 5 different methods but alas I have lost all of my data in My Documents and other places. So much for the bob-destructive restore,
27. But who cares? Now O can install Windows Vista Home Premium! Well I thought I could
28. As I run the install I am told that I have various progtams that need to be uninstalled before I continue
29. I can't uninstall one of the programs as it is not in the list of installed programs. It appears nowhere in the registry.
30. A Windows Vista install person guides me along with no success and we try Windows Vista install again
31. It proceeds very slowly and he puts me on hold
32. 10 minutes later he returns just as the installation program goes to the next screen and is checking compatibility we decide that it may take awhile but it seems to be working.
33. He tells me quite casually that Microsoft jas made them aware that there are severe problems installing Wondows Vista Home Premium on Windows Media Center 2002 SP2 - Guess what version I have?
34. Just as he goes away the install halts and insists that Roxio DVD Backup must be uninstalled before it can continue.
35. I decide to do a reformat and reinstall from the D: drive. It works!
36. I pull myself aside and decide to tell my tale of woe. Who knows what evil lies ahead.
There are millions of stories in the Microsoft World. This has been one of them.
Tune in next week for the next segment of Vista Installation - At least now I understand what the WOW! is all about. For the record the best effort came from Jody S. and the ticket numbers were xxxxx-28740 and xxxxv85517.

Chowhound
Comic Vine
GameFAQs
GameSpot
Giant Bomb
TechRepublic