Algorithms on Strings, Trees, and Sequences: Computer Science and Computational Biology
1) You should look at using a suffix tree data structure.
This data structure can be built in O(N * log N) time
(I think even in O(N) time using Ukkonen's algorithm)
where N is the size/length of the input string.
It then allows for solving many (otherwise) difficult
tasks in O(M) time where M is the size/length of the pattern.
So even though I didn't try your particular problem, I am pretty sure that
if you use a suffix tree and a smart formulation of your problem, then the
problem can be solved by using a suffix tree (in reasonable O time).
2) A very good book on these (and related) subjects is this one:
Algorithms on Strings, Trees and Sequences
It's not really easy to read though unless you're well-trained in algorithms.
But OK, reading such things is the only way to get well-trained ;)
3) I suggest you have a quick look at this algorithm too.
Even though, I am not sure but... this one might be somewhat
off-topic with respect to your particular problem.
The most fundamental data structure used in bioinformatics is string. There are also a whole range of different data structures representing strings. And algorithms like string matching are based on the efficient representation/data structures.
A comprehensive work on this is Dan Gusfield's Algorithms on Strings, Trees and Sequences
Suffix tree related algorithms are useful here.
One is described in Algorithms on Strings, Trees and Sequences by Dan Gusfield (Chapter 9.6). It uses a combination of divide-and-conquer approach and suffix trees and has time complexity O(N log N + Z) where Z is the number of substring repetitions.
The same book describes simpler O(N2) algorithm for this problem, also using suffix trees.