Right, decompiled it, it's a mess.
Main reason you're having problems is that schlub is a button, not a movieclip. Change it to an MC both in the library and on the stage, and add a stop();action to the first frame of it.
Secondly, give the 'VIEW IT' button the Instance Name 'butt' and add these actions:
on (rollOver){
butt._alpha = 0;
_root.shlub.gotoAndStop(2);
}
on (rollOut, dragOut,releaseOutside){
butt._alpha = 100;
_root.shlub.gotoAndStop(1);
}
Working