my guess is that it was zonealarm causing all your problem, it must have been blocking spybots communication.
the blue screen probably is caused by massive instability of windows 98 when spybot encounters its problem cancelling updates
over many times on many machines [fixing computers] (basically 100% of the time) if i run the intergrated update facilty and then try and cancel out of it (especially while actually downloading an update) spybot will essentailly become unstable whether its on windows xp and windows 98.
i think that when you click cancel the software will become unstable for up to about 5 minutes (espcially if its a sslow machine), but if you walk away and do not do anything else on the pc i find the instabilty stops when spybot finally figures out its having a problem downloading updates