Bengal Lancer,
It may be worth your while to take a deep breath and do your 2nd option. Painful though it is, it's probably the best option in the long run. You can be reasonably assured that you will have a clean system.
Perhaps before you do that it would be worthwhile upgrading to Win98SE (in Oz it cost only about $20.00 IIRC for CD media plus post, package and handling). Then download and save on your 2nd HDD IE5.5 from the microsoft site (or get it on CD - it may be available as an upgrade now, I haven't checked) These two together eliminate the need for many of the SP's and critical updates, though you will still have to get a few. At least you will have an up-to-date system.
I had my system screwed by badly behaving drivers for a USB camera, rather like your scanner software has stuffed yours, took the above route and have not regretted it.
(edited to add the postscript)
Cheers
AA
PS My scanner is an oldie - Optic Pro 9630P. I'd recommend it to anyone. I have a friend who uses a CANON on a USB port with good results too, but I don't know the model number - sorry.
[This message has been edited by Ausatco (edited 03 January 2001).]