I just got an '06 Prius in January, without the HID headlights, and I too get "blinked" a lot. I assume the lights are adjusted properly since I just bought the car new. I think it must just be something about the configuration that seems "high" to some people. We had the same problem with our Ford Escapes, I assumed it was because it was a bit higher off the ground than most cars, but that's certainly not true of the Prius.

Didn't notice any particular glare on the windshield, but I'll check again tonight.