Must I have a dedicated satellite box connected to PC?

My current configuration is: dish to box, box to living room TV, 2-way splitter from box to 1) kitchen TV and 2) computer.

Box is single, therefore, cannot watch TV independently.

When setting up TV signal on MCE, I do receive signal/picture, can download guide, etc., however, MCE states it cannot locate remote.

Thanks in advance.

While you don't need to have a dedicated STB for the Media Center (you can also connect that STB directly to a TV), you do need to keep in mind that you may end up with "unexpected behavior" if you do that - things like channel changes (when watching in the kitchen or living room) occuring unexpectedly, or recordings that suddenly change channel (when someone changes the channel in the livign room or kitchen, but MC is recording a show.)  Therefore, it's highly recommended that you have a dedicated STB for the Media Center.

As to your setup issue:  You must have a 'certified' MC-compatible remote kit (remote, IR receiver, and IR 'blaster.')  MC needs this (the receiver and blaster) to be able to control the STB (for, I hope, obvious reasons.)
Need the hardware?  Hauppauge's kit is nice (and stable!):  http://registration.hauppauge.com/webstore/accessories2.asp?product=mce_remote  $30