Generic Volume Shadow Copy and ActivityMonitor Install Prompts?

In the last few days I've been seeing a popup prompting to install ActivityMonitor whenever Ad-Aware tries to update AdWatch Live. The window says the component has not passed Windows logo testing, and because of that I have always stopped the installation. I did some research on this and Lavasoft, the creator of Ad-Aware, said it has nothing to do with the program and could be malicious. I have yet to get a confirmation on that but have also learned that this is happening with Kapersky's Internet Security 2010 as well. What is ActivityMonitor? Is it a safe program?

Now my next issue. Around the same time this started happening I began seeing a "Found New Hardware: Generic Volume" notification bubble in the bottom right briefly followed by the Generic volume shadow copy installation prompt. I've read that this happens in most cases following an OS upgrade, but I'm using Windows XP Media Center Edition and have never upgraded from a previous version. I've only seen this pop up once today and that was this morning, a couple of days ago it was happening much more frequently, like every 15 minutes or so. I know this is a Windows service, but why is it prompting me to install it? And why does it appear as if it's a hardware device?