First off, I'll list my hardware and software.

Hardware:
Tuner: PVR-250 (newer model) (Stock install Drivers)
TvOut: GF4 MX 4000 (Stock install nVidia Drivers)
Sound: SB Live! 128 Value (Stock install emu10k1 Drivers)
CPU: P3 500MHz
RAM: 256
MB: Asus P3BF

Software:
Knoppmyth R4v5

Synopsis:
-Recording programs, No issues what-so-ever.
-Playing back recorded programs, No issues either.
-Playing downloaded videos, No issues.
-Watching Live-TV, no issues UNTIL I change channels and/or pull up any information which requires the little popup displays which display show information, etc..
However, if I unload the sound driver (emu10k1), then Live TV works great. I believe it stems from the animation for the "Show information" dialog across the bottom of the screen. It only seems to lock up as it is "fading" away as it does lag the system. (underpowered, I know). What makes this a little odd is the fact that with sound "disabled" the fading does lag the box, but doesn't freeze it.
I have a feeling it has something to do with buffering (sound buffering in particular).
I do not know what to tweak to aide the buffering, I've checked though the normal menus and checked off anything that had something to do with buffering more.
I think it's also worth mentioning that it only seems to lock up X as I can CTL+Alt+BackSp to reload it just fine.

Any help would be greatly appreciated as all the topics I have read don't cover this particular issue.

Actually this sounds exactly like the Xv crash on OSD fade out that has been widely reported. You do seem to have come up with a new bit of information that I haven't seen reported anywhere else however. I'd strongly recommend a visit to the MythTV bugzilla page and either adding this info to the appropriate bug reports as a comment or opening a new bug report.

I'm getting the same problem with Live TV freezing after chaning channels. My specs are similar but I have a PII 400 CPU. I think its just a matter of hardware. That's my best guess. We probably need to upgrade to a 1Ghz+ machine.

Here is a mention about the OSD problems that are occuring with XvMC. Someone posted a possible solution. I'll try it on my machine to see if it works.

http://mysettopbox.tv/phpBB2/viewtopic.php?t=3247

Yes, the "remove sound module == no hang" is a new piece of info. Odd. Definitely put that in the bugzilla.

As larry implied, it could be, however, that no sound == slightly less CPU overhead, nudging you over the line into the safe zone.

-brendan