Previously you could force Tools to install in Win 98 SE by mounting the Parallels Tools ISO. However, using the current beta causes the Tools installation to crash the system. First the tray app crashes, and then the system becomes unstable (Start menu breaks, explorer crashes, fun stuff). This was tested on a 98 SE install that had Tools from the last stable version installed previous to the beta update. I've also attempted booting into safe mode and uninstalling Tools, then booting back up and re-installing... no go.
That's strange. I'm using Win 98 SE too. I was able to install tools from the menu just fine without having to mount the ISO. The problem I see is that some of the Tools are just missing. I don't have the Shared Folders or the Mouse Synchronization. Both are really important. Can't easily move files in/out and constantly have to hit a key combo to get the mouse in/out. Both really annoying. So is Tools officially supported in Win98SE or not? Partly supported? What's the deal?
