This is the latest update from Microsoft regarding the clash between WSE and System mechanic that I'm having. Not much of an update but at least a response.
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Dear Bob,

I apologize for the delay in responding you're your email. I've studied your issue; it seems to be an unusual issue that requires further research. So, I have forwarded this case to our Research and Development team. Please allow us some time so that we can come up with a better solution to resolve your issue. We apologize for the inconvenience that this may cause you, and we appreciate your understanding. We welcome any feedback you may have; I would be glad to forward such update on your issue to the Research team for immediate consideration.

Thank you for choosing Microsoft Security Essential Technical Support.
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Stay tuned for further developments.