When I select Start->Turn off computer->Standby the 'turn off computer' option window closes, and then nothing else happens. I can start new applications, and Windows acts like I never selected standby. I ran it for several hours after that. If I have a TV program scheduled to record when I select standby I get a window (the Pinnacle TV software) asking if I'm sure, there are programs scheduled to record - and the computer just keeps running after I select yes, never going into standby. I added that detail as it shows the standby process is starting. [This problem also happens if a TV program is not scheduled, so the scheduler task in not running/in memory. This problem happens regardless of whether I'm not watching TV. This problem happens regardless of whether Media Center is running (it usually isn't, I'm using Pinnacle to watch TV).]
I looked at "How to troubleshoot hibernation and standby issues in Windows XP" http://support.microsoft.com/kb/907477 - ACPI is enabled, and "standby" is an option in "Power Options Properties." So it appears to be setup correctly.
Windows XP SP3 Media Center Edition, all current updates installed.