Hi SunnyOz27
Welcome to the Norton Community. First, regarding the possibility of malware. It is possible but if this is the only problem you are having it is unlikely to be caused by that.
I have also never heard of a size limitation on the ID safe data.
You seem quite savvy so I am not being as detailed as I normally do.
By all means if you need more details on anything below, please let me know.
Two distinct possibilities are that there is a problem with the NIS installation or that the ID safe data has somehow actually become corrupted.
I would recommend that you run a chkdsk /r on your C drive to make sure there are no hard drive errors causing this. If this finds problems and corrects the ID safe issue, then you can skip down to the section to just do the upgrade to NIS 2010.
Before we continue on, in your first post you mentioned that your NPM data was from Nov 2008, then in your last post you mentioned Feb 2010. Can you confirm which one it is? If it is from Feb 2010, have you added a lot of passwords since then?
If the NPM file is from Feb 2010 and you are not concerned about losing passwords you have added since then I would first try to reset the ID safe and restore from your NPM.
If you cannot afford to lose those passwords then...
First I would recommend doing a manual backup of your ID safe data. Please see the following post for the location of the ID safe data file. Please NOTE that you may have to take ownership of some directories since Windows tends to block some directories in this area.
http://community.norton.com/t5/Norton-Internet-Security-Norton/Identity-Safe-Login-Location/m-p/153677/highlight/true#M77039
To upgrade to NIS 2010:
Next we really should get you upgraded to NIS 2010. NIS 2010 can read the 2008 version of ID safe so as long as the ID safe data files are not themselves corrupted it should be able to read the data.
You can download the full version of NIS 2010 from here.
Please make note of your NIS product key from your Norton Account. You may need this later when you install NIS 2010. Your current product key will work for NIS 2010.
I would normally recommend running the Norton Removal Tool at this point but we can try to forego that for the moment and try a conventional uninstall of NIS 2008 and install NIS 2010. We can come back to the removal tool later if we need to.
Please disconnect yourself from the Internet and uninstall NIS 2008 from control panel.
Then install NIS 2010 using the full version you downloaded earlier. Connect back to the Internet and run Live Update repeatedly (rebooting as requested) until it reports that there are no more updates.
See if ID safe now works. If not, you will probably need to restore the NPM file from Feb 2010.
Please let us know how it goes.
Best wishes.
Allen