First off, cancel all interest in this; it's not a bug. It's most probably a virus in action. (I just edited the original post to reflect the bogus nature of my false report.) No clue why it would attack Pegasus and not, hmm, OpenOffice.Org or whatever other freeware apps I'm running off the stick. But for whatever reasons, Pegasus is the victim. Duh.
Secondly, sorry for any confusion. Step #2 in the list is what happens after the USB stick is plugged into the port; i.e., the little window opens and asks what you want to do.
Now, to hunt the virus.
Hmmm, any clues on that and I'll be grateful.
It so happens that I've paid for 3 copies of Norton 360, and we're only using 1 of them. I wonder if it would be worth it, or if that would only exacerbate my problems.
Whatever, whatever, thanks for the response. As you can imagine, I'm highly annoyed by this. I'm trying to figure out what on earth could have happened. I highly suspect some sort of hardware (possibly firmware in the stick) error in this.
Whatever, thanks for your input.