It seems your graphics card does not support HDCP.
If you're lacking some pieces of the HDCP puzzle, you can—for the moment—watch Blu-ray movies at HD resolutions over an analog VGA interface, but its slightly lesser quality partly defeats the purpose of the upgrade. Also, this may be a temporary allowance. Blu-ray content providers have the option (not yet exercised) to manufacture their discs to include an Image Constraint Token (ICT), an electronic flag that throttles playback to low resolutions if HDCP is not present through the entire playback chain. As a result, we recommend the digital route for top quality and future-proofing, using a late-model, HDCP-compliant graphics card and display. (You're going to need the graphics pep to decode Blu-ray smoothly, anyway.)
Test that your PC is ready to play Blu-ray Discs http://www.cyberlink.com/english/support/blu-ray_support/diagnosis.jsp