Jargon File ``bug'' entry:
Grace Hopper ... liked to tell a story in which a technician solved a glitch in the Harvard Mark II machine by pulling an actual insect out from between the contacts of one of its relays, and she subsequently promulgated bug in its hackish sense as a joke about the incident. For many years the logbook associated with the incident and the actual bug in question (a moth) sat in a display case at the Naval Surface Warfare Center (NSWC).

The text of the log entry reads "1545 Relay #70 Panel F (moth) in relay. First actual case of bug being found". This wording establishes that the term was already in use at the time in its current specific sense -- and Hopper herself reports that the term `bug' was regularly applied to problems in radar electronics during WWII.
It goes on after that to examine it's potential etymology (but not entomology).
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Bitt Faulk