Although my application is different, the problem and cause are the same I believe.
I was using XP (skipped over Vista) with MCE 2005. I have a standard def. TV, and a monitor with speakers on long wires as a 'bedroom extension' of MCE. The monitor is on a KVM as a simple switch so I can easily turn it on from another room.
With XP the monitor and TV signals were always on, and I could turn off the TV or monitor, and when I turned them back on the signal was there; everything just worked whether they got turned off or not with the PC on, or in S3 standby.
But now with Windows 7 it detects whether monitors are turned on or off, and stops sending a signal if one or the other is off. Then all mayhem ensues as it wakes up with the TV on and monitor off, but it thinks it should only output to the monitor. And I
always lose the TV signal even though it's set as my 'preferred display' after waking up from S3. Rebooting (and losing a possible recording) is the only way to get it to output correctly again.
If they just took out the 'detect an off or disconnected monitor' switch, and put back XP's (and possibly Vista's) method of always outputting on all video connections, we'd all be happy.
The only other way is to always leave both monitors on, and never put the PC in S3 sleep, but WHAT A WASTE OF ENERGY! I thought Microsoft was trying to be 'greener', but making this single change is and will be causing people to be less efficient rather than
deal with the frustrations.
Edit: If I bypass the KVM I have the same problems; I don't think our issues have to do with KVM's, rather it's the signal that gets turned off or changed. Just keep giving me the signal (like in XP), and I'll control where it is shown. Otherwise
it's rarely where I want it to be.