I'm not sure if this is relevant, but in Panther, you have to install Classic, and once the OS9 system folder is installed, you need to go into System Preferences and tell it where the OS9 system folder is before you can run classic. Or else it will give you that error message. OK I don't think that solves your problem though, but it's all I know about this. (I'm a new maccie).
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The Queen of DaniWeb
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