TMPGEnc won't start, get error

[cthulhu]

I have used tmpgenc for 3-4 months with no problems. For the last couple of days tmpgenc has been locking up on just about every step of encoding an avi to an mpg. The errors were only numbers that I believe were generated by tmpgenc and only recognizable by it's programmer. Tmpgenc would either lockup or shutdown. It did this with one particular avi. I encoded two different avi's afterwards this started with no problems. Now, when I try to start tmpgenc, I get the error message, "Read error occured at address BFF7A125 of module 'KERNEL32.DLL' with 007CFFF8." I have updated to the newest version of tmpgenc and extracted a new 'kernel32.dll' from my win98se installation disk; however, the problem remains.
Virtualdub says that the avi in question had improper vbr audio encoding and has Xvid MPEG-4 codec for decompressor. I followed Daagar's guide for fixing audio drift without postprocessing - this has always worked before. After the problems started, I used to divfix to check for errors - none- and then rebuilt the index - just for the hell of it. Problem remains.
I think from what I have done so far that the problem might be from some unknown third party causing this problem. Has anyone else encountered this problem? Does anyone know of a fix? Thanks for your help.
PC - epox 8K7A, duron 750, 256 mb crucial pc2100 ddr, viper v770 agp, maxtor 20 gig & 60 gig, 50x cdrom, liteon 40x12x48, networked, cable

[Mavrick]

KERNEL32 is at the heart of your OS. Chances are the error occured somwhere else and the system did not catch it until it hit the Kernel. Somthing you might want to try is checking/repairing your system files. You can do this by going to the RUN box and typing SFC. This is the Win98 System File Checker and will Fix/Replace any altered/damaged system files on your computer.

[cthulhu]

Ok, I've tried the following:
file checker, deleted tmpgenc and folder, scandisked in windows and dos, defragged, reinstalled tmpgenc, searched registry, reformatted hdd, reinstalled win98se.
And after all this I still get that freakn' error.
Does anyone have any ideas?