Thanks you very much for your recommendations. My fix is continuing even now, with many issues. Ad-Aware won't run to completion ... it stalls on item #276. Disk Defragmenter gets to 2% done and loops back to zero, ad infinitum. At least I was able to wipe about 10% of his disk clean, which sped up his machine somewhat, and clean out a bunch of crap from his "Startup" folder, so he doesn't get six error dialogs when he boots any longer. Still gets a BSOD when he restarts, though. Now we've installed Norton SystemWorks 2002 and are running its (two years out-of-date) antivirus scan, hoping it will help. No problems found yet, hey there's a plus. I'll try AVG and Spybot Search & Destroy next.
Turns out he installed Win98 on top of Win95, not Win2K on top of Win98.
One fun URL I found, adding to the information compiled so far about spyware: