Since my previous postings, this has been working perfectly.
I have not been using it for movies though just TV shows.
I have even moved the watched state from one PC to another by doing the following:
Manually run the watchedlist app update on PC1.
Copy the content of the service.watchedlist folder to separate disc (watchedlist.db is the main file)
On PC2, manually run the watchedlist app update to make sure everything there is uptodate
Overwrite the watchedlist.db on PC2 with the file copied from PC1
Run the watchedlist app update on PC2
This then adds the watched state of everything from the PC1 database
Run the watchedlist app update on PC2 again to consolidate everything
This seems to work fine but as I said, I haven't tried it with movies