You should only have one prefs.prop file in your Docuemnts\Telltale Games\The Walking Dead folder. If you find a prefs.prop file in a Gamedata folder, or your Pack or Default folders, or in your Steam directory, these files should be removed. We are still investigating why this occurred, though users have reported that ever since Steam began 'converting files to a more efficient format', prefs files have popped up in strange places.
If you have eliminated the other prefs file and still experience the issue with starting Episode 4, please try copying your save to an unused slot and select 'Yes' when prompted for random choices and watch the Previously On scene. It's possible that the game has not registered your completion of Episode 3 and is prompting you with a message, that can actually be ignored. If all looks good when starting Episode 4, then continue as normal. If not, please try a few things. First, verify your game cahce. Next, try reinstalling Steam (this will require you to reinstall the game as well).
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