I had that problem June, seems one has to run it as an Administrator. Can't remember how I did that, but it was when my lappy was new, sometime last July. Never had that before, but then my previous machine was an aged old thing, so probably hadn't moved with the times!
Haven't done an upgrade on iStitch for ages, just checked and it is up to date.
I remember buying the ILSoft cross stitch program way back in the last century when it came on a three and a wotsit floppy disk, or two five and wotsits. Can't remember how much it cost, somewhere in excess of £30. That was in the days before I had a PC, I had am Amstrad 1640. When I invested in a 486 pooter I coughed up over £400 for the Professional version. I then bought the 2000 version, and sort of muddled through with this through several changes of hard drive and a new computer, though there were some 'issues' with Vista.
As Create & Craft were selling the latest version at £22, and free postage, it seemed silly not to buy it, especially as I had just bought my nice new lappy. Compared to the program I paid £400+ for all those years ago, the new version is fantastic. There were no ready to stitch charts, the destructions were pretty basic, and there were bugs, which required four patches. The charts alone are worth the £22. :)
I keep my own designs in a different part of my computer. I've never kept them inside the program itself. I was taught many years ago that it wasn't a good idea, especially as it slowed a machine down. Not that one should have a problem with the latter these days, but, well I guess old habits die hard, a bit like saving ones work every five minutes or so, it sort of becomes automatic.
I also back up my files to an external hard drive or three. One is connected to my lappy all the time, so backs up automatically. The other two I do a backup as and when I can be bothered. :)