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Does the CF card eject as expected when the FW drive is not connected? Sounds like the FW drive may well be the issue.
You might be right Geoff and it may be a sign of the external failing at this point.
The CF reader is a FW800 version and is coming off that external. It's the third in a chain of FW800 devices and I can't really plug the CF reader anywhere else without losing access to an external.
I'll look into getting a new external. Just thought it odd that this only happened after the update to Mountain Lion and thought I would check here.