I just got an email from support - wow, they are GREAT! I followed the instructions they gave me and my new Cricut (version 1.31) is cutting wonderfully now - Yayyyyyyyyyy!!!
Here is what they said to do if you have any problems:
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If you choose 1.3, it should work
Make sure the Cricut is connected directly to your computer and not
through a USB hub or another device such as your monitor or keyboard.
Make sure the USB cable is not loose at either end.
You can try different USB ports on your computer. If you have ports on
the front and back, the back ones may work better than the ones on the
front.
Also bad or cheaper USB cables are known to be problematic as well, so
you may want to try using a different USB cable to see if that helps.
Also if you ever have problems cutting, make sure you reset the Cricut
(turn if off and then back on) before trying to cut again.