Try to use tcpdump to read TEST file, but get permission denied.
 

Trying to use tcpdump -r TEST, and get permission denied, even though I am logged in as root or super user.
Tried using the "chmod a+rw TEST" (any other file for that matters, yes it came from another source) and get permission denied.

I'd expect you checked for this, but I have to ask.
The permissions on the file as shown as being accessible
by root, the file system the file is on is not mounted read-only
or NFS mounted, right?

What output do you get if you issue these commands:

and

Maybe I've misunderstood your question. On my system at least (Debian Squeeze), tcpdump is not an executable. You can see this below.
cheers,
jdk

ls -l TEST
rwxr-xr-x 1 jch jch 600 2006-05-28 12:27 TEST

mount -v
/dev/sda6 on / type ext4 (rw,errors=remount-ro)
proc on /proc type proc (rw,noexec,nosuid,nodev)
none on /sys type sysfs (rw,noexec,nosuid,nodev)
none on /sys/fs/fuse/connections type fusectl (rw)
none on /sys/kernel/debug type debugfs (rw)
none on /sys/kernel/security type securityfs (rw)
none on /dev type devtmpfs (rw,mode=0755)
none on /dev/pts type devpts (rw,noexec,nosuid,gid=5,mode=0620)
none on /dev/shm type tmpfs (rw,nosuid,nodev)
none on /var/run type tmpfs (rw,nosuid,mode=0755)
none on /var/lock type tmpfs (rw,noexec,nosuid,nodev)
none on /lib/init/rw type tmpfs (rw,nosuid,mode=0755)
binfmt_misc on /proc/sys/fs/binfmt_misc type binfmt_misc (rw,noexec,nosuid,nodev)
gvfs-fuse-daemon on /home/jch/.gvfs type fuse.gvfs-fuse-daemon (rw,nosuid,nodev,user=jch)

Okay, after running your commands, it works now! Maybe after running mount -v (???)

Go figure???