I cannot find my v1.01 (or whatever it was) that I got Spring 2007, but I never had issues with installing the v1.4 update on top of it, but of course, that was the Windows XP days... Anyway, one thing to do is to right-click your SH4.exe file, left-click "properties" on the menu, and see if it is set to "Read-only" under the attributes section on the "General" tab. If there is a check mark in the box, then that's the issue. OH! Don't forget to right-click the update file, and choose "Run as administrator"...
