If you run Zonealarm I can't help you. Call Zonelabs and have them fix it. I'm fed up with that issue.
Here's the note from my archive about system restore (SR).
I know the frustration about System Restore. You'll read thread after thread about this FRAGILE feature of Windows ME. The following is a collection of notes about fixing System Restore and what might interfere with System Restore (SR.)
To people trying to surf safely, firewall software such as Zone Alarm has stopped restore points from being created. If you've added such recently, disable such and see if the restore points are working again. Report this to the vendors/makers/authors so they will fix it.
Let's cover a few items?
1. The September 8, 2001 patch.
MS KB Q 290700 - "Checkpoints That You Create After September 8,2001 Do Not Restore Your Computer"
2. A rather LENGTHY article with many links and more articles on fixing System Restore.
http://support.microsoft.com/default.aspx?scid=kb;en-us;q306768"> Troubleshooting System Restore in Windows Millennium Edition
The information in this article applies to: Microsoft Windows Millennium Edition
This article was previously published under Q306768
3. How to use the SCANREG /RESTORE in Windows ME
http://www.windowsreinstall.com/install/trouble/INDEX.HTM"> Look down the page here
4. PARASITES. These can no longer be tolerated. Let me state that your antivirus does not detect/remove all PARASITES! I consider SPYWARE, ADWARE, VIRUS and TROJANS to be lumped into a category I call parasites. Symantec has yet to WAKE UP! to the spyware/adware parasite issue.
a. Adaware 6 from http://www.lavasoftusa.com">http://www.lavasoftusa.com or
b. Spybot from http://security.kolla.de/">http://security.kolla.de/
c. An online scan from http://housecall.trendmicro.com/">http://housecall.trendmicro.com/
5. The new menace. KAZAA borne virus. A big uptick over the last month of machines showed up with KAZAA and some trojan/virus that I think was brought in with KAZAA. The upshot of all this work was to remove the PARASITES, along with KAZAA and hope the machine would stabilize (most did.) A few were quite damaged so the OS was reinstalled.
When I try to use the restore feature, I get a message "System Restore cannot run until you restart your computer. Please Restart your computer and run Restore again." I believe it has something to do with a Windows Update item in which I get a message: "There is an impending Update that needs to be installed..." When I check the History of the Updates, I see one item, a Service Pack 1, that is "In Process" but also another SP1 that was Successful at a later date. Restart does not remedy the problem. Thanks in advance,