boot to dos and rename win.com:
ren c:\windows\win.com win.old
then attempt to run setup again.
or
To resolve this behavior, use the appropriate method:
1. At the command prompt, type:
dir vmm32.vxd /s
If the Vmm32.vxd file is not found, you must install Windows 95 or Windows 98 again. If the Vmm32.vxd file is found, note the folder in which it is located, and then continue with step 2.
1. At the command prompt, type the following commands, pressing ENTER after each command
cd windows
ren folder system
where folder is the folder you noted in step 1.
3. Restart your computer.
VMM32.dll missing
Question, did this machine have a UMAX Scanner loaded previously ?
UMAX problem with VMM32.vxd missing