It is normal for the options you described to be preserved across software installs. It is also normal for the pump to take a long time. You haven't described anything out of the ordinary.

I wasn't clear, from Hugo's post, whether the watchdog code at 0xc000 is replaced when using an .upgrade file? If it really is a bug in the watchdog code, and if 0xc000 is replaced on an upgrade, then what you just did should have fixed the problem.