Thanks for taking a stab at this, LogMAN!
Unfortunately, that did not work. Looks like there is something special about 'WaitForNextEvent' that recognizes system level WMI events that LabVIEW is not able to see. I'm no WMI expert, but I looked at this in terms of dataflow by highlighting execution on the block diagram. It appears that the data just flows through 'Reg Event Callback' node without waiting for the event as soon as the program is run.
I'm going to assume that there is a rather low probability of you having a Toshiba USB stick
I modified the code to where it detects the launch of Notepad. This way, you could test it on your system if interested.
Again, thank you for your help.
WMI_NotepadLaunchEvent_withTimeOut.vi