Read this courtesy of MikeM.
Joan

First check whether you can make a manual checkpoint or not.  If not, post
back details as automatic checkpoints will not be created if you are
unable to
create manual checkpoints.  If however you can make manual checkpoints
please
read on.

The absence of automatic checkpoints is normally because either there is
no
system idle time, such as when the user is running a program such as
seti@home, folding@home or other similar programs, or because a background
application is fooling Win Me's state manager.exe into thinking that the
system is not idle although this is not in fact the case.  Examples of the
latter utility include v4 of MotherBoardMonitor (but not v5), Cacheman,
The
Cleaner (TCActive and TCMonitor) and Norton's System Doctor where users
have
reported use of the Disk Health sensor has prevented the creation of
automatic
checkpoints.  NAV7 has also been reported as causing similar problems in
certain circumstances. Other users have reported similar behaviour due to
their always on cable or ADSL connection continually polling their HD and
thus
giving the impression that the system is never idle.

A significant number of users report that 3.x versions of Zone Alarm also
prevent the creation of automatic checkpoints but this doesn't seem to
affect
all ZA users (including myself).   This problem seems though to have been
fixed in the newer 4.x version of ZA Pro.  Similar problems have been
experienced by BlackIce users and other software firewalls have also been
reported to cause some users similar problems.

One user recently reported that B's CLIP UDF packet writing software
(http://www.bhacorp.com/products/clip/clip.html) also prevented the
creation
of automatic checkpoints.  Another user has recently reported that
CookieWall
by AnalogX will prevent automatic checkpoints being made if its "Scan for
cookies every .... seconds" is set to a value less than 121 seconds (two
minutes).

Basically you will have to do the hard work in determining what is
interfering
with the operation of System Restore by stopping the various background
processes and activities that you have launching when you boot your system
until you discover which is causing you the problems.  A good place to
start
would be to look at any new application that you might have installed
since
you are positive that System Restore was last creating automatic
checkpoints.
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