You think your running 2.05 but... Ok, you most likely are running all of 2.05, as you didn't pipe up and say "hey, the software update screen still looks like 1.31" but I had to ask, in Windows there is a thing called File and System Virtulisation in which if a program can not write to a system folder (like Program Files and apparently ProgramData too) Windows will redirect everything to a folder in which it can write to and use that forever after, even if you put newer files into the folder it was supposed to use in the first place. It was a long shot but 1.31's screen files could have still existed in that virtual folder and the 2.05 program could have been using them, even though it'd still be reporting it's version as 2.05.
I don't think your hitting the memory limit, unless you've got a whole lot loaded into the LM already. I've got one with two ULT prime mover files, one ULT horn and the generic prime mover, bell and horn that come pre installed loaded into it. From memory you get a not enough space error when trying to copy something bigger than the remaining space into an LM.
I've gotten the cannot connect error before when copying to an LM, and also tonight when copying an ULT prime mover. In both cases I just moved the CI-1 a bit closer and it all went fine next time. Didn't get a funky screen though.
It might be best to just get you the storage file ready-to-go just to rule out anything wrong with it though it'd be a large download at around 30 Megabytes.
- Tim