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At first, the fatal exception 0E @ 0028: C027xxxx in VXD VMM(06) + xxxxxxxx would happen only occasionally in Mozilla Firefox or Internet Explorer. Then I was seeing a 50% usage of resources while system was idling. Then a "dangerously low on resources" message.
I have run scandisk and defrag, checked for virus and ran spybot. No virus and no unusual spy/adware. I'm pretty careful to maintain the registry. I disabled systray with no effect. Now the above mentioned fatal exception is constant; open anything and the system blue screen hangs immediately. If I boot up in safe mode, programs will run fine and no blue screen!
According to Microsoft Knowledge Base, the particular message I'm getting is a Windows 95 corrupted registry message, but I'm running Win 98!
My bottom line question: is this most likely bad ram or most likely a driver problem?

Spybot usually is more effective if partnered with Ad-Aware, both miss things that the other picks up.
The common causes of the problem you've described seem to be sound ond video drivers. This is consistant with not having a problem in safe mode. Try removing and reinstalling these drivers.

Just a thought, might work on your setup, might not, every machine is diff. I was getting the exact same error msg, suggestion was made(right click my computer, click properties,click performance, click graphics, reset your graphics acceleration to the second of four settings, apply, or ok, computer should need to be restarted. That`s it. I did this a week ago, and haven`t had an error msg since. But I don`t do anything super performance related on this machine, it`s just a internet/music machine. If it doesn`t change anything for you on your setup, just go back through, and reset the graphics acceleration to full.

Bad RAM is possible, along with many other possibilities.
Sometimes you get W95 references because MS never updated the error message.
What do you do to maintain your registry? If you mean registry cleaners then if you are unlucky they might have actually caused the problem.
You lost me when you said you had disabled SystemTray. Usually no big deal (despite what some websites say) but not sure why you felt it was worth trying.
Derek.W

Big, Big thanks to everybody. Mike Peters, you had my problem nailed! When I turned down the Graphics Acceleration the system behaved like the whole thing never happened!
I find this interesting because the Graphics Acceleration was set to full for many months before the blue screen crash. I haven't touched either the drivers or video card on this system. Thanks for the live and learn!

I tried the same - my machine setup and symptoms are exactly the same as the OP's down to the same hex addresses given in the BSD - but it hasn't worked for me.
Funny thing is it varies from boot to boot. Sometimes the machine crashes within a few minutes of starting. Other times it is stable for the whole day.
It worries me that, like the OP, I have only just started experiencing this problem. perhaps it is either a new virus, or linked to a recent software update, perhaps AVG?

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