Myself and a lot of other people have been having the same problem. I actually lost a valuable 4 hour live set that I recorded due to the unit freezing when I tried to save the file :(
I just spoke to M-Audio Tech-Support and they were very helpful. On the website there is a new driver released January 25th.
When you search for new drivers click the box that says "show beta versions" and download the new beta driver "Version: 1.0.4 BETA (BETA)".
I'm going to test it out, I'll give an update. I hope it works cause I love everything the Microtrack II has to offer.
We'll have to wait to hear how it goes.