I can't understand why you couldn't create polygons with 9.3, let alone 10. 10 works differently than 9x so you might type create new features in the Desktop Help search box (or create new features in ArcGIS 10 in a Google search) and check out the results. 10 also causes some third party programs and scripts to fail, which may explain why your other program fails. If you still have problems I'd contact ESRI tech support.