Cant open files,my computer want to reformat?

Here is below the problem I got for the last 2 weeks.
I tried also to remove all the starut up software but still doesnt work. So now I amwondering how can I reinstall windows 98 se if I dont have the cds. My roomate bought this computer used and looks like he never got them. I have a c and d drive so my solution is to move my important file s via safe mode in d drive and reformat c drive...any idea how to re3format if I dont have cd?
First I have windows 98 second edtition. My roomate downloaded real player and possible other programs last week. We have Kazza too. This weekend when I restarted the computer I realized that I couldnt go into MY COMPUTER (desktop icon) or any folders. INternet is working and words and excel ( icon on desktop)
But others such as My computer files and folders dont let me open them I receive an explorer error message saying they did an illegal operation adn to restart if problem persist.
So I scanned the compu and defrag it no luck I ran anti virus and anti spyware (found some) and deleted them. Then went in command prompt and tried to restore to an ealier date but it doesnt allow me.
Then I went safe mode and realized that in safe mode I can enter all those folders and files and my computer icon ...

so what is my problem and how do I solve it I am running out of ideas and patience...I d rather not reinstall windows in total (especially if it works in afe mode so that means its ok right?)
HELP

 

Thanks Ill try that tonight but I think my roomate changed recently teh e drive(cd drive) and I noticed that on safe mode its not available and before teh problem (that i mentioned) it was I believe acting up (like wouldnt read my burned data cd but I thought maybe the problem was it was burnt with XP computer so maybe not compatible...)so now that you mentioned hardware I wonder.............Ill try this week-emd and thanks for answereing cause without the bootup cds I can only hope fix the prob with your much needed help