Did you try the TweakUi option to rebuild the icons? you have to run it sometimes each time after you make changes to the core system, which updating would do that
also, be sure you are running TweakUi133
Yes, if you reinstall windows, it will take you back to before you updated. unless you tried installing overtop the system, and not from a clean install. but most likely it will remove those "foreign" updates that the older Win 98 wont recognize.