They are referring to the Windows Paging File and unles you have specifically gone into your System properties and turned it off, there is a paging file set by default by Windows XP. This is completely separate from the Photoshop scratch disk.
Anyway, if the problem was this, Photoshop usually displays and error stating that there needs to be a windows paging file. I tried to run without a paging file on two of my systems (one with 512 and one with a gig of RAM) and niether would run Photoshop but in each case, it did come up with an error. I must agree with everyone else, do a clean install to fix this problem. Especially mixing a 9x system and an NT based one.