I too am pretty frustrated with the lack of an official answer from Buffalo. My previous Buffalo HD-PX500U2 finally died after many years of good service using the software encryption that came with it, so I thought the new HD-PZU3 would work just as well.
However, on some XP machines I get the same error message, and also on my old win7 laptop which I still occasionally use. This is most disturbing because I often rely on the files on the disc professionally.
However, I have managed to get the software to work on my old win7 machine by uninstalling the old Buffalo files installed from the previous version from the HD-PX.
I don't know if this will work for everyone. I have yet to try it on one of the old XP machines. I will report back and let you know if this solution works.
I