If you are running Windows 98, you may open the command prompt and change directory to "C:\" and then delete the "recycled" folder in C: by entering deltree command. After you delete the directory, you should create a new one by "md" command. If you do all these steps, it will probably solve problem because I exercised it and it worked
Again the commands that you should enter in command promt are:
>> cd C:\
>> deltree recycled
>> md recycled