Paul,
The Auto Update feature is attempting to access
http://www.wondertouch.com to see if there are any emitter libraries or application updates available for down load and apparently can’t get to the web site.
If you are using a proxy server for Internet access you will need to verify your “Internet Settings” in control panel (Win XP, not sure for Vista), connections tab and “Lan settings”. Yes you do need to fill in the information even if you don’t plan to ever use Internet Explorer.
If it is the “Firewall” blocking access you will need to add particleIllusion.exe as an exception. I am not 100% sure on this one because some IT setups just won't allow any update systems to work.
If these don't help give us some feedback about your setup,
John