Lots of respect for you, poor ME user.... Been there, done that. Could not reproduce it for you though. My only suggestion is that you use a different OS, lol. (It's also possible that the CLI version of 7zip does not work as expected when executed in Windows ME...)
Oh dear!
If I was given the choice between 98SE and ME, I'd take 98SE any day over ME.
Back then, I was using both, and I can't say I was too fond of either (boy was I glad when 2k came out!).
However, I still have a 98SE CD, while I trashed the ME one.
That gotta tell you, eh? 
As it happens to be, I just installed 98SE on Virtual PC.
And although the "hardware" comes straight form MS so to speak, I still managed to get a rundll error straight after first boot as well as an exception handling when opening IE for the first time.
Also, trying to update to IE 6 gave me an error message before it would work after some retries.
If that doesn't tell you something IDK what will...
Suffice to say support from MSFT has ended by July 11th or so, meaning that no security updates will ever be released.
Going online with that thing (while not running in a virtual environment) is just begging for problems!
PS: In case you wonder why I'm doing this:
A cousin of mine has problems running some older games on XP and after fiddling around with the compatibility settings for a good 15min I decided this was the easier way to go - and so it looks!