Try clearing the icon cache. Your problem could be due to your icon cache
having either being corrupted or your having more icons than it can
currently cache.

Using Explorer, unhide hidden files (Tools | Folder Options | View and
check "Show hidden files and folders") and look for and delete the file
SHELLICONCACHE in your Windows folder.  Don't worry, on rebooting it will
automatically be re-created.  You may also want to increase the number of
icons that can be cached by downloading a registry patch IconCacheFix from
http://www.aumha.org/reg1.htm and merging it with out registry.

An alternative method of repairing your icons is to use TweakUI where you
will find the option to "Repair Icons" on the Repair tab.  If you don't
have TweakUI installed the latest version of  TweakUI for Win Me (1.33)
can be obtained from
http://www.microsoft.com/ntworkstation/downloads/powertoys/networking/nttweakui.asp

Download to a folder with a short name (e.g. C:\Tweak), run to extract
components, right click on tweakui.inf and then install, close the help
window that comes up to allow install to finish.  C:\Tweak can now be
deleted and TweakUI accessed via the Control Panel.

Just a few words of caution though if you are new to using TweakUI on Win
Me.
a) Do not change the first icon (My Documents) on the Desktop tab.
Doing this causes a number of script errors in Special Folders when using
either WebView or Active desktop.
b) Do not uncheck "Search Results" on the Desktop tab.
Doing this disables the Search in Explorer.
c) Do not hide the TweakUI icon on the Control Panel tab.
d) Do not uncheck "Show Control Panel on Start Menu" on the IE tab.
Doing this will prevent you from accessing the Control Panel including
TweakUI.
e) Do not uncheck "Shell Enhancements" on the IE tab.
This causes quite a few unexpected "problems".