pdadoc, mine is an Alltel with the exact same firmware as yours. I also keep an SD card inserted most of the time, but w/o PIDirect.

When you say the pause happened immediately, you mean right when you opened the Kyo replacement shipment? If you installed software, then did a hard reset, that doesn't count, because there's a chance the sw might have done something permanent.

You said it only happens when the phone is on. Do you think it could be problems with reception? Gadget, are you also seeing the pause only when the phone is on?