There is a known problem with Backupbuddy incorrectly backing-up and/or restoring files which are currently locked and hooked up into PalmOS.
When run, Backupbuddy "restores" a corrupt 1k file which cannot be run or deleted by the standard system launcher. To fix it, try using TealMover or a similar file-management program to delete the 1k damaged file after turning off its protect and read-only bits and reinstall. If this does not work, please contact Blue Nomad for a fix to their bug, which has reportedly been fixed in a recent version of their program. Reinstall the program from the original download.
Incidentally, our own backup program TealBackup does not have this problem.