Corby,
I understand the pressure from a management figure (your CEO) and what that does to the decision making process. In this case you fell back to a known product that you feel you can rely on not to hassle her. But I think a different approach needs to be made, and it's not too late for you to make it I think.
Obviously giving this person attitude isn't going to get you anywhere, but I know from the way your posts are worded that even though you're frustrated with the situation you're not going to assert yourself directly without having a good argument to back it up.
So in my opinion, you can probably say that after further research you've concluded that you will need to put SEP back on there after all. This accomplishes two things, it shows your CEO you're actively investigating security concerns - and second, it teaches this CEO (because they do need to be taught) that it is not acceptable to always go with the older version. You'll never get budgetary approval for new products if the CEO has the mindset that it's ok to stick with older software, especially security software. Further, will future versions have to be investigated to ensure they don't contain annoying popups? If they do, what then? You can't base your product decisions on a CEO's inability to cope with popups, it has to be on the merits of the solution they provide and this has to be the primary impetus behind all decisions - everything else is secondary. The trick is now tho ensure everything else STAYS secondary. When the CEO stomps her feet in protest, you need to be prepared to deal with that without compromising your primary objective which is to stay on top of the security game.
So you have to seek ways to get things done despite these secondary distractions. For example, if you were to find documentation that shows that SEP can prevent more problems than SAV10 + Defender combined, then you have your backing in case it ever comes down to a debate about why SEP is more important to have. If your CEO believes that it's a battle between a more effective product and just some popups, she'll hopefully be smart enough to realize security is more important.
My advice is to approach her with confidence and firmness, but not brashness, and I think any CEO would agree on the merits of security vs. convenience. Then, you can tell her you found a settings that disables the popups. Show it to her, and if it DOESN'T work, then you can play the blame game on Symantec and contact support and go through all the motions so your CEO is further impressed with your diligence.
Or, you can create a regular maintenance schedule, like monthly or quarterly, with her laptop and take that opportunity to sit down with it and get SEP back on there, then explain afterwards why you did it. But in my opinion, most CEO's will respect you more for the direct approach rather than powering on their laptop one day to find SEP back on there, without explanation.
You know your situation best of course and my black & white approach obviously isn't going to be right on the mark, but hopefully it helps to have a 3rd person perspective a bit.
FWIW:
On my XP systems the problem was easy enough to reproduce (Start > Run, type
\\machinename\c$, KVM over to the other box and sure enough there was the little "traffic blocked" message). And I tested turning off the notifications and that works fine as well. AGain though, XP here. I hate Vista and I haven't yet gotten around to W7 testing but soon enough I'm sure I will. My SEP version is 11.0.780.1109 on all systems. Since she can't do anything useful about the IPS events anyway, might as well turn off the notification function. You can review the logs yourself during whatever opportunity you have to get ahold of her laptop (without her hanging over your shoulder, unless she's hot of course).