I am no expert, but I will try ..
Past Perfect Simple:
- uses had + verb (v3, the Past Participle)
The action was finished before another action started at that point
We
had hoped to visit Las vegas before we left America
Past Perfect Progressive (or continous)
- uses had + been + participle
To tell how long something continued before another action took place in the past
He
had been running for five miles before he took a break.
Both sentences are right. The usage depends on what you want to say. If action was continuing, at the time the next action happened, use the Past Perfect Progressive.
The rule that I know about the use of Past Perfect tense (both simple and progressive) is:
When the main verb is in the Past Perfect tense, the verb in the dependent clause is usually in the past tense.
eg, The game
had been won by the time I
arrived at the stadium
The example you gave:
1) He
has lived in this this house since 1968.
is actually
Present Perfect Simple , (although it does sound like past because of the use of 'lived', but it is not)
-uses has/have + verb (v3)
Here the action was completed in the past, but is still relevant
2) He
has been living in this house since 1968
is actually
Present Perfect Progressive (or continous)
- uses have/has + been + participle
The action started in the past, continued over a span of time and is still going on.
Both sentences are correct. The usage depends on what you want to say. If action is continuing, and its continousness is relevant, use progressive.
As I said, I am no expert. Check out some Grammar Internet sites, you should be able to get some more details.