You had it right: MPBUH = "May peace be upon him". It's the traditional way of mentioning the Prophet Mohammed in their religion.
The last contract job I worked, there was a very young, very confused security guard working the premises. He was Roman Catholic, but was flirting with the Muslims at UT, he'd always try to engage me in discussions about how wonderful Islam is, and I'd drag out my Bible and suddenly he'd have to go walk the perimeter of the building. He actually pronounced it (PBUH) as puh-buh - I noticed the same habit in several other Muslims when talking with them. "When the Prophet Mohammed, puhbuh, said blah blah blah..."