This are the changes Setshell is making according to the log:
HKLM\Software\Microsoft\Windows NT\CurrentVersion\IniFileMapping\system.ini\boot
shell=USR:Software\Microsoft\Windows NT\CurrentVersion\Winlogon

HKCU\Software\Microsoft\Windows NT\CurrentVersion\WinLogon

Shell=c:\litestep\litestep.exe

HKCU\Software\Microsoft\Windows\CurrentVersion\Explorer

Desktoprocess=1
SetShell code: 0
REBOOT :shell settings were changed

I looked in the registry and there is no entry under for Litestep or the Theme installer under:HKLM/software or HKCU/software
I have read all over the place for any reference on having to change additional registry besides what Shet Shell is doing and nothing.
Would you please give me some further guidance here.
What I did was just copied what I had (LS Directory)on my 98 machine onto c:\ drive on a XP laptop and run SetShell from the utilities foder, that seem to work ok (its changing the keys I mentioned) the LSThemeInstaller is the one that its doing what I explained.
Please help Thankyou,