Hi there EricV, I have chopped the first 28 seconds of the recording, and attached it here.  Not sure if that will work, but here goes.
I've setup the audio as per 
http://wiki.xbmc.org/index.php?title=HOW-TO:Configure_HDMI_audio_on_Gen_1_ION_%28linux%29
I have AC3 passthrough happening on this recording, as if I try to up the volume it says i cant as it is in passthrough.
The AC3 HD recordings still fail to skip with the passthrough active, so possibly still something not right in the file format?
Here is the log for playing back the full file, waiting about 5 seconds, then trying to skip ahead 30 seconds.
> 22:04:17 T:140468953392960  NOTICE: DVDPlayer: Opening: nfs://192.168.1.100/Multimedia/Movies/Parents/League Of Extraordinary Gentlemen.mpeg
> 22:04:17 T:140468953392960 WARNING: CDVDMessageQueue(player)::Put MSGQ_NOT_INITIALIZED
> 22:04:17 T:140467473442560  NOTICE: Thread CDVDPlayer start, auto delete: false
> 22:04:17 T:140467473442560  NOTICE: Creating InputStream
> 22:04:18 T:140467473442560  NOTICE: Creating Demuxer
> 22:04:18 T:140467473442560  NOTICE: Opening video stream: 0 source: 256
> 22:04:18 T:140467473442560  NOTICE: Creating video codec with codec id: 2
> 22:04:18 T:140467473442560  NOTICE: CDVDVideoCodecFFmpeg::Open() Creating VDPAU(1440x1080, 2)
> 22:04:18 T:140467473442560  NOTICE: vdp_device = 0x00000001 vdp_st = 0x00000000
> 22:04:18 T:140467473442560  NOTICE: VDPAU Decoder capabilities:
> 22:04:18 T:140467473442560  NOTICE: name          level macbs width height
> 22:04:18 T:140467473442560  NOTICE: ------------------------------------
> 22:04:18 T:140467473442560  NOTICE: MPEG1             0  8192  2048  2048
> 22:04:18 T:140467473442560  NOTICE: MPEG2_SIMPLE      3  8192  2048  2048
> 22:04:18 T:140467473442560  NOTICE: MPEG2_MAIN        3  8192  2048  2048
> 22:04:18 T:140467473442560  NOTICE: H264_MAIN        41  8190  2032  2048
> 22:04:18 T:140467473442560  NOTICE: H264_HIGH        41  8190  2032  2048
> 22:04:18 T:140467473442560  NOTICE: VC1_SIMPLE        1  8190  2048  2048
> 22:04:18 T:140467473442560  NOTICE: VC1_MAIN          2  8190  2048  2048
> 22:04:18 T:140467473442560  NOTICE: VC1_ADVANCED      4  8190  2048  2048
> 22:04:18 T:140467473442560  NOTICE: ------------------------------------
> 22:04:18 T:140467473442560  NOTICE: Mixer feature: VDP_VIDEO_MIXER_FEATURE_NOISE_REDUCTION
> 22:04:18 T:140467473442560  NOTICE: Mixer feature: VDP_VIDEO_MIXER_FEATURE_SHARPNESS
> 22:04:18 T:140467473442560  NOTICE: Mixer feature: VDP_VIDEO_MIXER_FEATURE_DEINTERLACE_TEMPORAL
> 22:04:18 T:140467473442560  NOTICE: Mixer feature: VDP_VIDEO_MIXER_FEATURE_DEINTERLACE_TEMPORAL_SPATIAL
> 22:04:18 T:140467473442560  NOTICE: Mixer feature: VDP_VIDEO_MIXER_FEATURE_INVERSE_TELECINE
> 22:04:18 T:140467473442560  NOTICE: CDVDVideoCodecFFmpeg::Open() Using codec: MPEG-1/2 video (VDPAU acceleration)
> 22:04:18 T:140467455645440  NOTICE: Thread CVideoReferenceClock start, auto delete: false
> 22:04:18 T:140467473442560  NOTICE: Creating video thread
> 22:04:18 T:140467482846976  NOTICE: Thread CDVDPlayerVideo start, auto delete: false
> 22:04:18 T:140467482846976  NOTICE: running thread: video_thread
> 22:04:18 T:140467473442560  NOTICE: Opening audio stream: 1 source: 256
> 22:04:18 T:140467473442560  NOTICE: Finding audio codec for: 86019
> 22:04:18 T:140467473442560  NOTICE: Creating audio thread
> 22:04:18 T:140467447252736  NOTICE: Thread CDVDPlayerAudio start, auto delete: false
> 22:04:18 T:140467447252736  NOTICE: running thread: CDVDPlayerAudio::Process()
> 22:04:19 T:140467447252736  NOTICE: Creating audio device with codec id: 86019, channels: 2, sample rate: 48000, pass-through
> 22:04:19 T:140467482846976  NOTICE:  (VDPAU) screenWidth:1440 vidWidth:1440 surfaceWidth:1440
> 22:04:19 T:140467482846976  NOTICE:  (VDPAU) screenHeight:1080 vidHeight:1080 surfaceHeight:1080
> 22:04:19 T:140467429455616  NOTICE: Thread Vdpau Output Thread start, auto delete: false
> 22:04:19 T:140467429455616  NOTICE: COutput::OnStartup: Output Thread created
> 22:04:19 T:140467429455616  NOTICE: VDPAU::COutput::CreateGlxContext - created context
> 22:04:19 T:140467429455616  NOTICE: VDPAU::COutput GL interop supported
> 22:04:19 T:140467429455616  NOTICE: VDPAU::COutput: vdpau gl interop initialized
> 22:04:19 T:140467421062912  NOTICE: Thread Vdpau Mixer Thread start, auto delete: false
> 22:04:19 T:140467421062912  NOTICE: CMixer::OnStartup: Output Thread created
> 22:04:19 T:140467421062912  NOTICE:  (VDPAU) Creating the video mixer
> 22:04:19 T:140467429455616  NOTICE: VDPAU::COutput::InitBufferPool - Output Surface created
> 22:04:19 T:140467429455616  NOTICE: Previous line repeats 8 times.
> 22:04:19 T:140467429455616  NOTICE: VDPAU::COutput registered output surfaces
> 22:04:19 T:140467482846976  NOTICE:  fps: 25.000000, pwidth: 1440, pheight: 1080, dwidth: 1440, dheight: 808
> 22:04:19 T:140467482846976  NOTICE: Display resolution ADJUST : default: 1920x1080 @ 50.00Hz (14) (weight: 0.000)
> 22:04:19 T:140468953392960  NOTICE: CWinSystemX11::SetFullScreen - calling xrandr
> 22:04:19 T:140468953392960  NOTICE: CVDPAU::OnLostDevice event
> 22:04:19 T:140468953392960  NOTICE:  (VDPAU) FiniVDPAUOutput
> 22:04:19 T:140467421062912  NOTICE: CMixer::OnExit: Output Thread terminated
> 22:04:19 T:140467429455616  NOTICE: VDPAU::COutput: vdpau gl interop finished
> 22:04:19 T:140467429455616  NOTICE: COutput::OnExit: Output Thread terminated
> 22:04:19 T:140467482846976  NOTICE: CVDPAU::Check waiting for display reset event
> 22:04:19 T:140468953392960   ERROR: GLX: Same window as before, refreshing context
> 22:04:20 T:140468953392960  NOTICE: Using GL_TEXTURE_2D
> 22:04:20 T:140468953392960  NOTICE: GL: Using VDPAU render method
> 22:04:20 T:140468953392960  NOTICE: GL: NPOT texture support detected
> 22:04:20 T:140468953392960  NOTICE: GL: Using GL_ARB_pixel_buffer_object
> 22:04:20 T:140468953392960   ERROR: GLX: Same window as before, refreshing context
> 22:04:20 T:140468953392960  NOTICE: CVDPAU::OnResetDevice event
> 22:04:20 T:140467482846976  NOTICE: vdp_device = 0x00000001 vdp_st = 0x00000000
> 22:04:20 T:140467482846976  NOTICE:  (VDPAU) screenWidth:1440 vidWidth:1440 surfaceWidth:1440
> 22:04:20 T:140467482846976  NOTICE:  (VDPAU) screenHeight:1080 vidHeight:1080 surfaceHeight:1080
> 22:04:20 T:140467429455616  NOTICE: Thread Vdpau Output Thread start, auto delete: false
> 22:04:20 T:140467429455616  NOTICE: COutput::OnStartup: Output Thread created
> 22:04:20 T:140467429455616  NOTICE: VDPAU::COutput::CreateGlxContext - created context
> 22:04:20 T:140467429455616  NOTICE: VDPAU::COutput GL interop supported
> 22:04:20 T:140467429455616  NOTICE: VDPAU::COutput: vdpau gl interop initialized
> 22:04:20 T:140467421062912  NOTICE: Thread Vdpau Mixer Thread start, auto delete: false
> 22:04:20 T:140467421062912  NOTICE: CMixer::OnStartup: Output Thread created
> 22:04:20 T:140467421062912  NOTICE:  (VDPAU) Creating the video mixer
> 22:04:20 T:140467429455616  NOTICE: VDPAU::COutput::InitBufferPool - Output Surface created
> 22:04:20 T:140467429455616  NOTICE: Previous line repeats 8 times.
> 22:04:20 T:140467429455616  NOTICE: VDPAU::COutput registered output surfaces
> 22:04:20 T:140467482846976  NOTICE: -------- drop output
> 22:04:25 T:140467482846976  NOTICE: Previous line repeats 25 times.
> 22:04:25 T:140467482846976 WARNING: CRenderManager::WaitForBuffer - timeout waiting for buffer
> 22:04:25 T:140467447252736 WARNING: CDVDMessageQueue(audio)::Get - asked for new data packet, with nothing available
> 22:04:25 T:140467473442560  NOTICE: CDVDPlayer::OnExit()
> 22:04:25 T:140467473442560  NOTICE: DVDPlayer: eof, waiting for queues to empty
> 22:04:25 T:140467473442560  NOTICE: DVDPlayer: closing audio stream
> 22:04:25 T:140467473442560  NOTICE: Closing audio stream
> 22:04:25 T:140467473442560  NOTICE: CDVDMessageQueue(audio)::WaitUntilEmpty
> 22:04:25 T:140467473442560  NOTICE: Waiting for audio thread to exit
> 22:04:25 T:140467447252736  NOTICE: thread end: CDVDPlayerAudio::OnExit()
> 22:04:25 T:140467473442560  NOTICE: Closing audio device
> 22:04:25 T:140467473442560  NOTICE: Deleting audio codec
> 22:04:25 T:140467473442560  NOTICE: DVDPlayer: closing video stream
> 22:04:25 T:140467473442560  NOTICE: Closing video stream
> 22:04:25 T:140467473442560  NOTICE: CDVDMessageQueue(video)::WaitUntilEmpty
> 22:04:25 T:140467473442560  NOTICE: waiting for video thread to exit
> 22:04:25 T:140467482846976   ERROR: Got MSGQ_ABORT or MSGO_IS_ERROR return true
> 22:04:25 T:140467482846976  NOTICE: thread end: video_thread
> 22:04:25 T:140467473442560  NOTICE: deleting video codec
> 22:04:25 T:140467473442560  NOTICE: CVDPAU::Release pre-cleanup
> 22:04:25 T:140467473442560  NOTICE: CDVDPlayer::OnExit() deleting demuxer
> 22:04:25 T:140467473442560  NOTICE: CDVDPlayer::OnExit() deleting input stream
> 22:04:26 T:140468953392960  NOTICE: CWinSystemX11::SetFullScreen - calling xrandr
> 22:04:26 T:140468953392960  NOTICE:  (VDPAU) Close
> 22:04:26 T:140468953392960  NOTICE:  (VDPAU) FiniVDPAUOutput
> 22:04:26 T:140467421062912  NOTICE: CMixer::OnExit: Output Thread terminated
> 22:04:26 T:140467429455616  NOTICE: VDPAU::COutput: vdpau gl interop finished
> 22:04:26 T:140467429455616  NOTICE: COutput::OnExit: Output Thread terminated
> 22:04:26 T:140468953392960   ERROR: GLX: Same window as before, refreshing context
> 22:04:26 T:140467429455616  NOTICE: Thread Background Loader start, auto delete: false
> 22:04:27 T:140468953392960   ERROR: GLX: Same window as before, refreshing context
> 22:04:27 T:140468953392960  NOTICE: CDVDPlayer::CloseFile()
> 22:04:27 T:140468953392960 WARNING: CDVDMessageQueue(player)::Put MSGQ_NOT_INITIALIZED
> 22:04:27 T:140468953392960  NOTICE: DVDPlayer: waiting for threads to exit
> 22:04:27 T:140468953392960  NOTICE: DVDPlayer: finished waiting
Cheers, Nathan