There is Main Menu > plugins > transcoding setup. Newer version of BH dont have an enable option in this menu anymore. Do you know of any other place it needs to be enabled?
Older versions of BH used to have 2 icons next to each channel in the webif. Once to stream the TS and one to stream a transcoded option. Now, only the TS option is present. Had the problem on 3.0.2 F and is still the same on 3.0.2 G. Not sure when this stopped working, as I've not tried to use it for a while.
My main objective is to set up streaming to a chomecast, wthout using an external transcoding server as the VU+ Duo 2 should (and was) capable of transcoding itself.