I have always used the former, both as an idiom (to be severely punished, often used as a superlative in jest) and in reference to the historical form of capital punishment. I have always used hanged when referring to capital punishment.
To be hanged, drawn and quartered sounds wrong to me (it may be useful to note here that I am from the UK), however, logically, I see that it should grammatically be correct, and is indeed the heading of the Wiki article on the topic.
Have I been wrong all these years saying hung, drawn and quartered?