It looks like the setup is a little different in Lion. In order to fix it here, I deleted the entire ~/Library/Application Support/Microsoft/Silverlight folder, and the preference file at ~/Library/Preferences/com.microsoft.silverlight.plist, then reinstalled Silverlight. It’s not a surgical, tactical strike against the evil forces of Microsoft invading my Hackintosh, it’s more of an all out nuclear attack to wipe out the enemy, then a treaty with military occupation sort of thing.
This one stumped me for a while. Apparently Microsoft Silverlight takes a hash of some of the hardware in your system and uses it when making DRM keys. Yeah, real forward thinking Microsoft. That means that if anything changes hardware-wise, your Silverlight installation is going to bark at you over anything DRM related, including Netflix, with this lovely and descriptive error message.
Since Hackintoshes change configuration pretty frequently, this problem is pretty big in our community.
Anyway, the fix is to delete the file that this DRM hash is saved in, and restart your browser.