Bare minimum, you must load the main chipset drivers for the mboard's chipset in order for the Shutdown to work correctly.
If it still doesn't work correctly, you could try the shutdown supplement. Whenever you load Windows from a regular Windows CD (or DVD) from scratch, after Setup is finished you must load the drivers for the mboard, particularly the main chipset drivers, in order for Windows to have the proper drivers for and information about your mboard hardware, including it's AGP or PCI-E, ACPI, and hard drive controller support. If you have the CD that came with the mboard, all the necessary drivers are on it. If you load drivers from the web, brand name system builders and mboard makers often DO NOT have the main chipset drivers listed in the downloads for your model - in that case you must go to the maker of the main chipset's web site, get the drivers, and load them.
E.g. If the system is Compaq Presario 5700N as in your first post, the mboard is probably a Mitac OEM mboard made only for Compaq, it has has PWA - AVNV printed on it, and it's chipset uses Via drivers.
http://www.viaarena.com
Drivers - Platform or Chipset
If any chipset driver files are corrupted, you can get symptoms the same as if they had not been loaded.
Loading them again ma cure problems if they have already been loaded, and in most cases you do not need to un-install any chipset drivers before you load them.
"My friend's PC is also running very slow;"
There are zillions of possible causes for that.
" I remember something similar happening to me with my older PC and I think the issue was that the hard drive was using real mode drivers instead of protected mode drivers. "
That can be directly related to having NOT installed the main chipset drivers.
Only REALLY old hard drives need to run in real mode, as in, ones made before 1994 or so.
Some old ones, usually 8gb or less in size, cannot run in DMA mode.
If the chipset came after the operating system was first released, it is quite common for the hard drive controllers to not be detected properly until after chipset drivers have been loaded.
"We tryed disabling IRQ Steering."
Disabling IRQ sharing is a last ditch thing to try - the mboard probably won't work properly with it disabled.
You almost always DO NOT need to disable it.
"We made sure Disable FastShutdown was turned on."
You should NOT need to disable that either!
"There is a message which says A fatal exception has occured at some number in Vxd VWIN32(05) + 000012D0."
That's not especially useful info.
If you got a "Stop 0X........ " error with that, state that instead.
Is that the only blue screen message, or are there others?
Exact errors messages are a lot more useful than approximations of them - write them down and quote them.
Usually the first part of the message is enough info - the desciption of the memory address location where an error is usually of no use unless it is always exactly the same.
Do you get the blue screen messages when it is booted in Safe mode as well?
Rule out errors caused by a failing hard drive.
Check your hard drive with the manufacturer's diagnostics.
See the latter part of response 1 in this:
http://www.computing.net/windows95/...
Run scandisk on at least C with it set to fix any errors found.
You could try an "overtop" install of Windows - that may fix errors caused by corrupted or missing files that are on the Windows CD.
Insert the Windows CD in a drive.
Boot the computer with a floppy Startup Disk for 98 or 98SE depending on what it has.
Load the default support for CD drives.
Type Setup when the files have finished loading.
If the drive is larger than 528mb, you will be prompted to enable large drive support or similar - agree to that - it does nothing that would harm the data on the drive.
Install Windows in the SAME location it is in now - usually that's the default C:\Windows.
If you're not sure, quit Setup and make sure.
If you install Windows in in the same location, you will not lose the previous settings and program installations.
Setup will proceed pretty much normally, except usually you do not need to provide the Product Key, and you are only asked a few questions rather than many.