I tried defragmenting the internal HD (Disk Defragmenter), but the
process keeps restarting itself after about 30% completion. I assume
it is because there is something running in the background, which
periodically writes to the HD. All antivirus and spyware programs are
turned off, and I don't know what else could be causing it.

Three questions:

1) Unlike Win2000, 98 doesn't do disk analysis first, and jumps right
into defrag. Is there a way to determine if I even need defragmenting?

2) How can I find out what keeps writing to the HD?

3) Is there a way to create an external Win98SE bootable CD and
include Disk Defragmenter on it?

Thanks,
Alex