Hi again
To use the USB flash memory drive, you might need to install WinMe specific drivers for it first (though it won't hurt to try letting it detect it). WinMe's USB support is better than Win98 or Win98se's, but that isn't saying much! Compatible WinMe drivers are usually provided by the drive manufacturers.
To check the CD-drive, boot into Safe Mode (tap the F8 key as your PC is starting to see the Safe Mode Menu). Then right-click "My Computer", choose "Properties", and then "Device Manager" (or perhaps "Hardware" then "Device Manager"... I don't have a WinMe PC handy & it's been a while). Remove the CD-drive from Device Manager by selecting it from the list, and clicking "Remove". Then reboot, and see if the PC correctly detects the drive. Then test with a known-good CD (no scratches or smudges ... a music CD would do). It might be that the drive is failing - WinMe hardware is due to start reaching it's end-of-expected-span by now (though well-made parts often work well long after the average span).
Truthfully, there is so much going wrong with your PC, I think you probably should check the hardware, to make sure that you aren't trying to fix a hardware problem with a software solution (which of course doesn't work).
Run some diagnostics, and check your Bios settings.
1) Test the memory ---
http://www.memtest.org
2) Test the hard drive ---
http://tacktech.com/display.cfm?ttid=287
3) Check the Bios Settings --- find a system manual for your make/model (Google is good for that) & look in on the settings. Make sure the time/date haven't gone backwards several years -- that usually means that the CMOS battery needs replacing. Your system manual would answer your question about what the default settings are. (So long as you don't have unusual settings for the hard drive, using the default settings shouldn't hurt ... usually the default is to auto-detect the drives).
If the hardware proves OK (even the CD-drive) -- a reasonable repair might be to try an in-place 'over-the-top' reinstall of Windows (when successful, you don't have to reinstall all your personal data or programs). But you need to make sure no viruses are present before performing an over-the-top.
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Windows 98/Me "Over-the-top" Reinstall
Sometimes an over-the-top reinstallation of Windows can be a timesaver. On most recent computers the whole procedure can take as little as 30 or 40 minutes. A nice feature of this procedure is that your programs do not have to be reinstalled, and your data is not lost. You likely will need to visit Windows Update when finished, though, to download and reinstall some of the Security Updates. [Windows Update still works for Windows 98/Me, even though its period of active support by Microsoft expired in mid-2006 (all the updates up to that point can still be found there)].
Beforehand:
You may need to temporarily disable the Bios virus protection that is found on some motherboards (if your motherboard does not have this feature, you can skip this step). Enter Bios Setup by pressing the key displayed during startup, and somewhere on the first or second menu should be an item to Enable or Disable Bios Virus Protection (might be called BiosShield, or VirusGuard, or whatnot) ---> then, when you're finished with your reinstallation of Windows, re-Enable the Bios protection feature.
During the reinstall, it is also a good idea to be entirely disconnected from any networks, wired or wireless (unplug ethernet cables, disable wireless), and to be disconnected from printers, scanners, cameras, multifunction devices, fax machines, PDAs, memory card readers, USB flash drives, external USB/Firewire/eSATA drives, etc.
Over The Top ReInstall:
Place your Windows98/Me CD in the CD/DVD drive (or be ready to point Windows to the place on your hard drive where your Windows 98/Me installation files are stored).
Boot with a bootable floppy (or CD - "with CD-rom support"), and from DOS rename the win.com file to win.bak. Like this
C:
cd \Windows
rename win.com win.bak
If you have the Windows 98/Me CD in your CD/DVD drive, you can then switch to the drive letter of your CD drive [often drive D:], simply by typing the drive letter followed by a colon ( for example - D: ) at the command prompt. You can then start setup by typing setup from the command prompt.
If you don't have a Windows 9x/Me installation CD, but instead have the Windows 98/Me installation files on your hard drive, switch to that location (which is often C:\Windows\Options\Cabs - by typing cd C:\Windows\Options\Cabs ), and start setup (by simply typing the command: setup)
***Important!*** When Windows asks if you want to use the directory
C:\Windows.000, instead choose
Other and type in
C:\Windows (
without the .000 following).
Make sure that you have your antivirus, antispyware, and firewall running before you connect to networks afterward. Don't forget to visit Windows Update ASAP to get the Critical Patches the need reinstalling.
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Best of luck!
. . . Gary