The 250GB HDD was a fresh install. I didn't transfer anything over from the 40GB. It was freshly placed into the PS3 and I didn't copy anything over to it. There was no backup and restore used.
This was the first time I'd tried to use the XBM for copying offline saves to the PS3. Even with the 40GB HDD I had never tried it before. XBM seems to be corrupted in some way. I don't know what else it could be here. I'm grasping at straws trying to get this figured out.
None of the "safe mode" options did anything for me either. If there's issues with XBM there's an option to restore it back to default settings. I tried that with no luck!
The explanation from the Sony rep was a joke. To blame it on copyright when the saves I'm using aren't copyright protected is ridiculous. I don't know about his other explanation in matching firmwares. Why would it matter what firmware version was used when making the save? I honestly don't know what's happening but I'd like to get it resolved. Geez!