Did you get the box again, like above? Did it say you still have a newer copy?

No, it did not say I had a newer version. Once I had placed it in the trash can it allowed me to install the copy from DVDSP. However after I had done that there still wasnt the option in FCP4

FCP comes with the "Compressor" Application too. If you export using compressor you can create MPEG2s with that, if you have given up on the Quicktime MPEG2 converter....

Ill probably have to give that a shot...although i think I had once and when I click on compress using compressor nothing happens...