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I have to presume that the application is written in such a way that it tries the insert, and if it fails, it just tries again. Otherwise the insert will fail (PK violation) and your users will have complained and filed bugs. If the purpose of this is to just assign unique numbers in a random order, then it may be the case that the application is working ...

Based on the information you provided in the SQL script, the NT account which the SQL Server service is running under doesn't have access to the folder which the file is sitting in. You'll need to see which account the SQL Service is running under, then grant that account rights to the folder.

Indexes are optional on SQL Server tables. In fact, you can add constraints (primary key, unique) within the CREATE TABLE statement but you cannot add indexes at the same time. The indexes come later - this on its own should convince you that a table must be able to be created without indexes. This rules out option (4). In Clustered and Nonclustered ...