+1 for cjl recommendation on LD drives ( Much better "reviews" on newegg than Liteon. Just got a H2OL Last night. Have installed it and checked that it can read/write a DVD but have not checked it performance with Blu-ray yet.
NOTE: You didn't list your monitor. Not only your Graphics card has to be HDCP enabled (Believe yours is) But also Your Monitor. I have an excellent Dell LCD Monitor (20 in 4::3 paid $800) that is NOT HDCP and therefor to use it I would have to switch from DVI input to VGA input. Another option (I think) is to Buy AnyDVD HD.
Ref to required software:
No ( at less I could not find) any "Free" BD players. The LG comes bundled with Cyberlink version 7.x, which needs to be patched. Newer version 8 needs to be purchased, AND removed HD so that it only plays BD movies (may be wrong, but this is the indication I get from other posts).