The IR blaster plugs into any usb socket & the IR cable plugs into the back of the blaster. Then you stick the eye of the IR cable I.e. the non plug end over the IR receiver on the stb, so that what happens when you press a button on the microsoft remote, the correct wmc signal is sent down the IR cable & into the stb, thus changing channel etc.
Edit:...which is a bit of an ache, but will run wmc as it was intended.
AFAIK you will need the mce remote. I have no idea whether the Packard Bell one will work with wmc. Try their support website I guess.