Windows ME hangs on startup

I am having a problem where Windows ME hangs on the wallpaper screen on startup. It started with an message that it couldn't find SHLWAPI.DLL. I extracted the file from the installation disk. I restored to a previous registry point. I still can't get windows to load past the wallpaper screen.

I get past the login and I can even see the files from the laptop, which is networked to it. In fact, I was able to backup my data files to the laptop in case I need to reinstall.

When I do a Crtl>Alt>Del I only see two files something like winmgm and wmd (not exact), but no explorer or systray. The only option I have left, as far as I can determine from the HELP file is to run setup.exe from the installation disk.

If do this, am I going to have to reinstall all my programs and lose my data files? The help file says to choose "use safe recovery", but I don't see that option. Any help will be appreciated.

Thanks
Rich