You may have a problem with the disk drive itself. From your Windows ME boot diskette
(DOS), run SCANDISK C: and then let it run a thorough scan of the disk drive.
It may take a long time. If it stalls at some points, then you know there are disk
errors that it is trying to correct. Be aware, that if it can not correct these disk
errors and save the data, it just fills in zeros for the lost data. This could have
caused your registry corruption in the first place.
Once you have ran a full SCANDISK C: then try doing the SCANREG /RESTORE again.