I found a fix.

You have to update driver cache after blacklisting.

Code:

update-initramfs -u

From http://ubuntuforums.org/showthread.php?t=1767781

I am experiencing the exact same problem as Scottman1987 on Mythbuntu 11.04 64 bit. Even after blacklisting, r8169 reloads upon startup and causes poor or no network connection. I also experience system lockups while running the above instructions.