>>The Win98SE box is running Shell32.dll version 4.72.3612.1700.
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>I wonder if the fact that I have version 4.72.3110.6 of Shell32.dll if that could be the reason it is acting differently. If so, is it possible to update that file? If it can be updated, what are the distribution issues with relation to compatibility, copyright, licensing, etc.? Can the Shell32.dll from an even newer machine (from WinME for example) be distributed (copied) onto the Win98 box without causing any issues? (Man, I'm full of questions tonight!) lol
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You can try it, but it probably is dependent on versions of several other DLLs, and I suspect that at least a few of the files will be in use, requiring use of delayed replacement and registration for these files. Consider upgrading the IE version on the troublesome systems to at least IE 5.5 SP2; I know that there are revised shell support DLLs loaded during the 5.5 upgrade when deploying on systems that have the Active Desktop Shell Extensions running.

If you access WTS or Citrix, there are considerations upgrading to 5.5SP2 or IE6; older ICA clients do not work thse versions of IE. Citrix has posted a revised ICA ActiveX client that has full supprot for the updated Browsers; they can be downloaded from www.citrix.com, and from what I've seen, there is no reason not to upgrade the Citrix ICA clients to the current version, especially running MetaFrame XP.
Currently, all systems on the sites I'm involved with have Win2K Pro and XP Pro running on all internal stations, and use MetaFrame XP and ICA or the Win2KAS TS with WTS Advanced client sessions for remote access, and none of the boxes here have Win9x currently running. I'll try to run an image backup of the spare XP box and deploy the last Win98SE image backup during the weekend to test this.