Let's be clear, I and the moderators here don't work for Microsoft.
I'm sorry to read that your neighbor has had problems with the update to 2.0 on 2 machines and the problem has not yet been resolved with tech support. At the risk of sounding like a defender of Microsoft, any major upgrade brings with it a risk that something will go wrong at release, despite testing. In this case, it would appear that a few too many problems happened that were unexpected and not encountered in testing. I know that the developers are working hard to identify the causes of the problems and have already done so in many cases, which is why the released version currently out there is .14 when it was originally deployed as .10 and updated to .12. Further updates are likely to address more items as they are identified.
I would hope that support and you neighbor have looked at the services identified in this post - http://forums.microsoft.com/WindowsOneCare/ShowPost.aspx?PostID=2523777&SiteID=2 and have also looked at the Peer to Peer Networking service, which has been found to be the cause of most of the high CPU issues reported so far.
Without knowing more about the backup problem, I can't speak for what may be happening there.
The upgrades to 2.0 have been suspended and will resume after the fixes have been tested. Since OneCare is a subscription service and self updates, you won't be able to prevent an update unless the PC never connects to the Internet. It is also worth noting that the vast majority of people are *not* encountering problems with OneCare following the upgrade from 1.6. we tend to see a high amount of traffic in the forum for problems because that is what forums and support are for - help with problems.
As I said before, I don't work for Microsoft, but I suspect that you can obtain a refund if you choose to cancel your subscription due to problems encountered with the upgrade to 2.0. You will have to contact Customer Service (support) for this.
-steve