Changing the BIOS to S3 -before- installing XP is mandatory if you every want it to work right, so you're on the right track there. Dunno about Vista. Vista only survived on my box for 4 days, then I went back to XP. Didn't like it...
Standby does work perfect, I have two of these FID boxes. All the fans shut off, drives spin down, very nice.
On one I have the USB hack so the mouse wakes it up, and on the other one I left that off in case the mouse wiggles - I don't want that one waking up, so the power button wakes it.
So it DOES work. Now the trick is to find out what's causing yours to not work. Since it makes your computer dead powered off instead of staying in standby, try these:
1 make SURE your ram is in the slots closest to the cpu. Those are the ones they need to be in for standby
2 make sure your BIOS battery is not dead (I'm sure you would have told us if you were losing your BIOS settings too - but just thought I'd add that)
3 change your power supply, maybe the one you have doesn't work right in low power mode.
4 yank out every card, every usb device. Start with a ps/2 mouse and keyboard, and see if it works. Then start plugging everything back in one at a time to see when it stops working. Any component can interfere with Standby.
I'm betting on RAM or Power supply
** Dunno about Hybernation. I hate that, first thing I always do is turn that off.