Debby-
I don't have any great answers for you, but i have a few questions

This computer has a Centurion Guard - does it have any other public access security system on it?
Were you having the same issue with NAV 2006? Was there a different issue (other than auto-updates continueing?)
How much free room is there on the C: drive (let me know if you don't know how to check this)?
When the temporary storage message happens, are logged in to a public account? Does it make any difference if you leave it logged in to the adminstrative account?
My guess about the temporary storage issue is that you may be running out of hard drive space. Otherwise it could possibly be a restrictions issue, where the program is being blocked from doing something, but the 49mb thing sounds like some kind of real space issue.