You say that booting to hard disk gets you to a C:\ prompt, but then you
say that you booted to safe mode, or at least tried. I think there's a step
in the middle you haven't mentioned, but the message indicates a simple
problem with MSDOS.SYS. See here for an explanation of what might have
happened and how to fix it.
http://support.microsoft.com/?kbid=149110
Cannot Start Windows 95 After Using the SYS Command

See here for more information on what the file should look like::
http://support.microsoft.com/?kbid=118579
Contents of the Windows Msdos.sys File
--
Jeff Richards
MS MVP (Windows - Shell/User)
"Robert" wrote in message
...
In an effort to open up space on one of our win98se machines my children
(they go back to school Monday) started to delete things "they" thought
were
not needed. I'm not totally sure what it was they deleted but I now have
the
following:

The System:
Pentium w/MMX
233 mhz
92 ram
win98se

When I try to boot up we get the following. "Invalid System Disk." I tried
to get it going with a win98 boot disk and read in the help file that if I
saw the error above that I should run "SYS C:" I did this and it reported
back that the "System Transferred". I then shut the computer off (with the
power switch), took out the boot disk, and attempted to restart the
computer
only to get this: "c:\" and when attempting in safe mode this: "Windows
is
bypassing your startup files". I have also run Scandisk (off of the boot
disk) and it found no errors on "C". Is it possible to get this unit
running
again?