Mike, I'm not sure what to think about Statemgr missing, etc. I'm not a ME expert, 
but I've learned a few things. System Restore isn't always reliable anyway, so don't 
count on it to always bail you of trouble. Many ME users simply don't use it at all. 

Manually is the best way to clear out restore points, especially in the case of malware 
infections where the restore points become corrupt. I don't know that it will work 
for you under the circumstances, It's worth a try, so we'll start with this.

To Manually clear out old Restore points:

You'll need a ME startup disk (boot disk) to get to the command prompt on a Windows 
ME system. If you don't have a startup disk, you can easily create one. Get a blank 
floppy diskette and stick it in the drive. Go into Add/Remove programs. Click the 
Startup Disk tab and choose Create disk...
OR:
Download a ME boot disk image here Bootdisk.com 
and create one on another system.  

Then boot with the startup disk in the floppy drive. At the A:\  type the Deltree 
command below. Note the space (upper or lower case, doesn't matter in DOS).
 
A:\}DELTREE C:\_RESTORE

*Deltree is DOS for delete, and it's a very powerful command. You can't undo it. 
(Just a warning in case someone else happens across this) 

Once it's finished, remove the diskette from the drive. Then Ctrl_Alt_Del to get 
back into Windows.

This will delete all of the temp files. Then (normally) Windows ME will create a 
new folder and a few empty dat files.  Let me know how it goes. 

Blocking Unwanted Parasites with a Hosts File

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