I had a search on the TEAC site and found nothing at all about the box. It has RS-232 input which I don't know whats that for. So is there a firmware update? How do I update? Is it possible to make my own custom firmware? How can I get it to decode HD signals.

The RS-232 port is for technical connection, which may include FW updates, but I would only be sticking Teac FW on there, not any home made stuff unless you really know what you are doing which by the sounds of your questions you do not.

The unit will probably not have the grunt or chipset to handle HD signals, therefore you are better off getting a new HD STB/HD PVR for that purpose.