Dweezilz:
I'm surprised the MCE remote doesn't work through the RCA IR to RF. They seem to work well with any sort of universal remote. The keyboard, not so much, IR keyboards are notoriously more complicated.
As far as the keyboard goes, have you considered buying an RF keyboard. I spent $10 on mine and it works well. I'm not going through walls or anything though and I don't have an MCE specific keyboard. I can't recommend anything specifically, but there are RF wireless keyboards designed for MCE. There are also RF remotes and RF keyboard/remote pairs. Gyration comes to mind. Again I can't recommend them based on first hand experience but they seem to have a good rep. Microsoft is supposedly coming out with some for Vista but I wouldn't hold my breath.

muskrat1997: I had nothing put trouble with the HVR-1600 IR receiver... without even an RF distribution system. It will just stop working for no reason at times...

I just bought a Philips SRM7500/37. Two way RF and IR remote for Vista MCE/SideShow. I'm hoping this resolves my MCE remote issues.