A friend had an two-year old Sony VIAO PCG-F520 notebook (not really that old) and it was -- as you say -- set up for a particular version of Windows, in this case Windows 98SE (as the sticker on it clearly stated) and the Sony website had caveats/warnings re: upgrading to Windows ME!
Although I don't have much experience with laptops/notebooks, I couldn't see how doing a "format c:" -- as on a desktop -- and installing Windows ME -- a glorified Win 98 if you will, still Windows 9.x code -- would be that bad. A computer is a computer, laptop or desktop, and I've read of people in newsgroups using even Win XP on an old Pentium II...it runs SLOWLY but it's working. So I reformatted the notebook HD and did a clean (full) install of Win ME...it's been working just fine so far (almost a month) and NONE of the Sony "Win ME" instructions were followed NOR were any of the number of listed Sony "Win ME VIAO Drivers" downloaded/used.
Go figure.
Maybe he can even try Windows XP? It SHOULD work on a 2-year old computer I would think, even a notebook.
The point is, just save off your HD what is important to you -- personal files, e-mail, favorites/bookmarks -- and TRY a clean install of 98 or ME. The worst that can happen is you'll have to go back to Win 95, but nothing will get "broken." Do a clean install instead of an "upgrade" over 95.
For example, I tried that with putting Win XP over Win ME but it didn't work well: The OS ran just fine and I could do just about everything I had been doing with ME -- P2P file sharing, RoadRunner cable modem Internet access, you name it -- BUT I began to experience those mysterious "random reboots" some XP users have reported which Micro$oft claims is due to some misbehaving device driver, but I could never identify it. When it would happen, ALL work in progress was 100% lost with no hope of recovering it. Because these reboots would happen at ANY time, you knew that what you were working on could be lost instantly...that wasn't acceptable waiting for a time bomb to go off if you will. So I reformatted the HD and did a CLEAN install of XP...after that, no more reboots...I'm using that computer now....SAME hardware.
Whatever, just try it...you might get lucky! If Windows 98 would work, then I think Windows ME would, too...that may be your max but try 98 -- or ME, the last of the 9.x OSes -- anyway. At the very least it's a learning experience.
Good luck,
John D.