If you reinstall over top of your existing installation, you will, as lnguyen says, have a mess, or at least be likely no better off. The right thing here is a fresh install. That's if you are sure the problem is not with the one piece of hardware. Have you tried another CDROM drive?
The answer to most of your other questions is yes, you will have to reinstall most of those things. But you can make it all a lot easier, if you have other partitions than just C: on your drive:
Copy your W98 CD to an empty partition if you can - difficult if you have no CDROM working.
Copy your precious data, address books, favorites folder etc to another partition. Also copy the Windows Update Setup folder. That's where your updated IE setup files are. If you want to download most of the updates/patches/service packs first from the
Windows Corporate Update Site to this partition that will speed up your reinstall. Also any driver files you need, neatly unzipped as necessary into their own folders, so you can browse to them.
Now in goes the W98 startup disk you no doubt already have. Don't run fdisk, too much danger you will delete some partition unintentionally. Just format C:.
Now you are ready to go. From the prompt type the path to your W98 install files and then setup & hit enter.
Here is an alternate method I picked up from some site last year which should work if your CDROM won't work in Windows, but will work when you boot from the Startup disk:
"You do not need the "Full version" CD to do a full version install. The upgrade DOES have all the same info as the full version. If you want to do a clean,full install from the upgrade do this.
Format c:
Go to c: Type md win98
(that will make a dir called win98)
Go to the cd drive d:
copy d:into c:win98
(this will copy the whole CD onto into the win98 dir you just made)
Go to the c:win98 and type setup.
There you go!
Windows 98 will not ask you for the CD ever again. It will know to allways look in the win98 dir. It will also not ask for proof of a earlier version"
Good luck.
