Can't Start Up in Normal Mode Win98SE HELP HELP

I have been having problems defragging my hard drive over the past few
months. It either runs very slow or it ends up in an endless loop and
doesn't complete. I was able to defrag in safe mode a few weeks ago. I am
running on an older self built system that is fine for my needs. All I use
it for is a visual basic database, office, winfax, and internet
surfing/email. I used a third party defrag yesterday and it told me it
couldn't run as I was missing some dll. Well it went from bad to worse.
Now, when I boot up I get error messages saying that there isn't enough
memory to open c:/system, not enough memory to run
c:/programfiles/microsoftoffice/office/OSA.exe. When I clear the startup
list to nothing selected, it boots fine and I can even access the internet
as I am doing here, but the icons on the desktop are all oversized, and when
I go to print a document I get a machine language error message. I have
tried cleaning up my registry; running SFC, checking for viruses, etc. with
no improvement. I tried reinstalling Office 97 and it said that i.e. was an
older version that what I have installed and it would cause problems (I
think there is a trick with this ... (kernel32???). Seems to me that there
is a way to install Office 97 over Windows 98 and then update i.e. to the
current version but I forgot how. I tried installing Office 2000 but it
would not install it (can't remember the error message). I am lost and do
not want to reformat my HD as I don't have everything backed up. It seems
like a low level problem as I can launch documents (can't print). Can
anyone help. Would Norton Utilities help???