The WalMart site is very clear about backing up your licenses. They'll allow you to re-download anything you bought from them as long as you have your licenses on the computer. They even have instructions on moving your licenses to your new computer so your music will work.
I have a very similar problem. Win2k pro, wmp 9, suddenly NO wma can be played, I got the message requiring DRM upgrade and then "Windows Media Player is not installed properly. Reinstall the Player."
Any solution yet?
P.S. No walmart, another on-line music provider.