The following applies to Vista, so I'd be grateful if anyone could confirm it works on Windows 7.
For me, deleting the MSPR.hds file just wasn't enough - I needed to go one step further. There is a hidden PlayReady Cache which appears to store historic DRM keys and data...
Launch the Windows Command Prompt as admin (go to Start, search for "cmd", right-click and Run as administrator) and enter the following:
*cd %ProgramData%\Microsoft\PlayReady*
del *.hds
rmdir /S Cache
You'll be presented with a Y/N prompt: hit Y and press return. Windows will delete the hidden Cache folder and all its content, which for me was enough to get Netflix up and running again.
N.B. Usual disclaimers apply, there's no guarantee this'll work for you or that it won't have an adverse effect on any other DRM protected content on your PC, so try at your own risk.