This is what I would have suggested for the .lnk file problem:
(Sorry, LS, your post is too long for my short attention span)

I will give you a fix for the usual lnkfile problem
Make a file from the lines below called Link.reg and doubleclick it.
You can use Notepad to create it from this message. Don't retype it as
an error might occur. Copy it.
Ensure that REGEDIT4 is the first line and that your mail/newsreader
does not add a space to the end of any line.
Ensure the last line is blank.
If your Windows folder is other than C:\Windows then alter the file
accordingly.

You will need to restart Windows after this fix to see the effect.

----------Link.reg ----below this line
REGEDIT4

[HKEY_CLASSES_ROOT\.lnk]
@="lnkfile"

[HKEY_CLASSES_ROOT\.lnk\ShellNew]
"Command"="C:\\WINDOWS\\rundll32.exe AppWiz.Cpl,NewLinkHere %2"

[HKEY_CLASSES_ROOT\lnkfile]
@="Shortcut"
"EditFlags"=hex:01,00,00,00
"IsShortcut"=""
"NeverShowExt"=""

[HKEY_CLASSES_ROOT\lnkfile\CLSID]
@="{00021401-0000-0000-C000-000000000046}"

[HKEY_CLASSES_ROOT\lnkfile\shellex]

[HKEY_CLASSES_ROOT\lnkfile\shellex\IconHandler]
@="{00021401-0000-0000-C000-000000000046}"

[HKEY_CLASSES_ROOT\lnkfile\shellex\DropHandler]
@="{00021401-0000-0000-C000-000000000046}"

[HKEY_CLASSES_ROOT\lnkfile\shellex\ContextMenuHandl ers]

[HKEY_CLASSES_ROOT\lnkfile\shellex\ContextMenuHandl ers\{00021401-0000-0000-C000-000000000046}]
@=""

--------(end of link.reg-----

....Alan

--
Alan Edwards, MS MVP W95/98 Systems
http://dts-l.org/index.html


In microsoft.public.win98.gen_discussion, "LuckyStrike"
om wrote:


Next: I then decided to re-boot and.... virtually every desktop shortcut
icon - whether they were standard OEM icons or Custom icons became the
Windows default icon. Ditto for the score of QL Toolbar icons as well.
Furthermore, all were changed to .lnk extensions.