BINGO! Forget booting off that quickplay button, the latest BIOS changes the way that button works (to make it 'vista' compatible, which doesn't support QuickPlay Direct).
Since I wanted to run the latest BIOS, I decided I'd have to find a new way into QuickPlay Direct 2.1; I've succeeded in booting QuickPlay via Windows XP's boot menu.
Step 1: Modify your boot.ini to something similar to mine:
multi(0)disk(0)rdisk(0)partition(1)\WINDOWS="MS Windows XP MCE 2005" /noexecute=optin /fastdetect /usepmtimer
multi(0)disk(0)rdisk(0)partition(2)\WINDOWS="HP QuickPlay 2.1" /fastdetect /maxmem=256
But naturally, when you try to use that 2nd boot option, you get a BSOD as it's booting that version of Windows.
Step 2: Download the 'Restoring HP QuickPlay Boot' file (sp34444.exe) from HP's support website and attempt to install it. If your like me, you'll get some kind of error about the control panel, ignore it. Now load up a command prompt (start/run/cmd) and go to c:\swsetup\sp3444 and run 'mbrinst.exe /ini mbr.ini' This will bring up a nice little window, now I'm not 100% sure what I'm doing in here, but I do know what options I've selected to make it work. On my laptop, I've deleted the HP Recovery partition, it'd only restore XP Home which I have no intention of going back to, so I only really have 2 partitions, the main one, and the HP QuickPlay partition, no recovery. So I left 'none' checked under Force Start, under 'Recovery Partition' I selected 'Is part of user Partition' left the Timeout at 1, Left the QPlay option checked, and under "Partition Table" I clicked on "User part first" (I think this is the most important part), then clicked on Install.
Step 3: I booted off a Linux CD (in my case, a Gentoo LiveCD), and used 'fdisk /dev/sda' to set both partitions to Bootable, and I set them both as type 07, which is NTFS. So now that QuickPlay partition is no longer hidden, and it's toggled as bootable, just like the regular windows partition. Both are identical now.
So I go to reboot, and the Windows XP menu is displayed. I selected the HP QuickPlay option from the XP menu, and sure enough, it booted the QuickPlay Mini-Windows w/o any BSOD's. I think the BSOD's and hal.dll problem is due to the partition type (being hidden) and it not being set bootable. I kept setting it unhidden/ntfs and setting it bootable, but whenever I tried booting off of it, it'd blue screen and it'd also re-hide itself and re-unset itself bootable. I figured out Step 2 above (using mbrinst.exe) kept it from re-making itself hidden and not-bootable.
So now, when I boot up, I get the option of my Regular Windows MCE, or my HP QuickPlay. Now I've got the latest BIOS adnd I'll still get the battery-saving performance that I wanted out of QuickPlay Direct in the first place. I just won't be able to use that button, but it's a minor inconvenience.
So to recap my findings, if you want that button to work, you'll have to use BIOS F.13 or older, nothing newer. Then create that blank/unformatted partition at the end, install QuickPlay, let it do its thing, etc. then in theory that button will work.
If you want the latest BIOS, F.22 or newer, you'll have to find another way into QuickPlay Direct, which I've done by setting the QuickPlay Direct partition as NTFS (not that hidden/unknown/stealth partition type) and setting it as bootable just like the primary partition. Then you can modify your boot.ini to boot off the QuickPlay partition. You know, if you can dual boot Vista and XP, I've seen where you can add XP into Vista's boot menu, I imagine you can use this same trick. Just add the QuickPlay option to the boot.ini of vista, do that mbrinst.exe thing, set the partition as NTFS and bootable (have to use linux's fdisk) and bingo, it should work.
Thanks go to linusl's post on page 42 of this forum/thread. His post got me 90% there. hxxp://www.notebookforums.com/showthread.php?postid=2530532#post2530532