To make it easier for other member in my situation, I am making a new thread with an update too my previous 2 (apologies if this is considered spamming):
1)http://hongkong.geoexpat.com/forum/54/thread276253.html
2)http://hongkong.geoexpat.com/forum/54/thread276361.html
So I went to the Immigration department today myself, and I was told by the visa officer in charge that as long as I have the extension application receipt, I can stay in Hong Kong as long as they are making a decision, EVEN if my current visa expires.
In case, the IANG visa extension is refused, then I have one day to leave HK. But if approved then all is OK.
I would like to thank all members here who gave me their valuable advice. Really really appreciate the help