After summoning the creature and finishing the slideshow nothing happens. I get 2 "excited" events and one "spitting" event but after that I'm just told press "I" to change slide..... if I attempt anything else I am told to turn on the projector again.

Third restart and am getting frustrated. Any thoughts?

You have to keep it in an excited state for a little while until it gets exhausted.

You can also whip out your trouser snake to excite it.

I kept getting stuck in the same loop. For some reason it just wouldn't continue.

Turned out that one of the thought balloons just didn't occur for some reason. So, if you still haven't got past it, or for anyone else stuck in the loop, try this:

Reset that part of the story again. When it gets to the part where you need to show it the slide show, go through as normal, up until the final slide when it starts spitting goo. Make sure you get the thought bubbles about it getting excited and about it spitting the goo.
Then, you need to whip it out. If you do this too early I think it messes it up, or maybe it's just pure luck. If it works, you should get a comment about it being excited by your penis, and then Peter will finally figure out that sex excites it and mentions about getting it exhausted.
First time through that last part just didn't show up for me and the game wouldn't continue. If it does though, then you can actually wear it out. Otherwise you'll just be stuck watching it bounce around forever.