I'm using Windows ME and I have a same same kind of a problem.
I tried to install a new theme, there was an error, Litestep asked if I'd want to revert to the default theme. And I accidentally pressed "No". Now whenever I try to run Litestep, I get an error.

I tried editing the system.ini, I changed shell=E:\LITESTEP\LITESTEP.EXE to shell=C:\WINDOWS\EXPLORER.EXE and now it just boots the computer when it should go to Windows.

Anyone know what to do? Should I copy the explorer.exe from a friend too?