[Sundraoi]

I think the second option would be better. Make is so that once taken, the PC must take 5 lvls of SD before taking levels in another class.

Yes, the main reason to take SD is for the HiPS at first level. Since there is already the notoriety enforced to take the PrC to begin with, the rogue is already pushing or over 10th level before they can take SD. Making them wait another 3 levels to get the "true" benefit from SD would make more people go for that nifty cloak quest item that's out there and skip the SD entirely.

The changes to the PrCs are to balance them out as well as make some of the lesser used ones more appealing. Making it more difficult for SD to get the benefit of HiPS would balance it out, yes. But in my opinion it would also make SD not so appealing to play for those who don't want to wait til well past the mid range of the level cap to benefit from it.