Ok guys, here goes! I'll do my best to explain this as accurately as I remember!
Steve and I completed a TS session, where at the end, he suggested I install a new instance of W2K and then immediately install SQL. That worked after some major tweaking of the security settings for drives/folders/files. At first, I couldn't even get a second instance of W2K installed.
This suggests several things to me. Try these on for size and let me know what you think.
1) The permissions were set too strict, not allowing the installer to copy existing files as needed (this sounds most feasible, since after trying other things, once I changed the security settings, everything went fine).
2) Office 2000 or other programs already installed were interferring with the install; suggests that instances of all servers should be installed before any general purpose applications (sounds reasonable as a general best practice, but may not have been the problem).
I wonder what would have happened, now that this is all over, if I had uninstalled Office 2000 and WebObjects 4.5, then tried installing SQL (bypassing the installation of the 2nd instance of W2K)?
Thank you Steve and everyone else for your active participation in helping me get my problem resolved. I can't say that enough, really! I just hope that my experiences will help someone else avoid what I have gone through. This just goes to prove once again, that some of the most persistant, aggravating problems usually have the most simple solution. Unfortunately, this is most often realized ONLY after one finally wipes the sweat away.
Now the lengthy process begins, undoing what I've done to get this resolved and starting from scratch to put it back together.