[texhax] Mysterious hang-up using bibtex.

[Karl Berry]

    But then (usually it seems) after a ***long*** while and repeated 
    re-attempts,
    everything suddenly works!  I then get:

If you haven't figured it out by now ...
I suspect it's searching your whole filesystem, due to some sort of
envvar missetting, of, say, BSTINPUTS.  You could run

  env KPATHSEA_DEBUG=-1 bibtex demo >/tmp/out 2>&1

And get voluminous debugging output.  What's in there should show the
path that bibtex is using for BSTINPUTS and why it's doing what it's
doing.

Hope this helps,
Karl