Paul,
I haven't seen or found the exact issue you described. I did find something similar dealing with a hang in the TS 2.0 Operator Interace, which has been fixed for TestStand 3.1.
The deployment process, as you described it, should work fine. So I don't know why it didn't work the first time before you replaced the testexec.lib. Was there an error number associated with that message?
Matt P.
Applications Engineer
National Instruments