Sorry for the confusion and here's the response that I got.
"hardware encode acceleration will be enabled when the VGA card is CUDA, VRAM over 512MB and OS is above Vista." so there could be some problem with the driver that was installed on your computer.
I got a feedback that the ASUS Driver is currently at version 267.85 while yours is "285.62" I would suspect that you downloaded the 285.62 driver from NVIDIA and not from ASUS. Can you try and install the driver provided by ASUS, since there could be a reason why ASUS driver is only at version 267.85.
You can download the ASUS Driver at http://www.asus.com/Graphics_Cards/NVID ... /#download
and download the driver dated 2011.05.04.
Let me know what happens.