Will start in safe mode but not in normal. Have tried every diagnostic in safe mode, uninstalled every unnecessary periphial, config selective start up, diconnected sound card, second HD and cdr to check for shorts. Nothing. I'm totally stumped. The machine is not connected to the web and it was used the night before solely to burn cds for date transfer to new system.

try installing 98 overtop itself,also maybe one of your devices is causing the problem.

Have you tried a step-by-step confirmation to see where things start to go wrong?

Some one could be pulling a prank on you. If you put shutdown.exe with appropriate switches into your startup folder then the computer will do exactly what you are describing. Check the startup folder and see what is there.

I mean boot into safe mode and check the startup folder

I think it's a Protection Error, after that my old pcs show the "It's now safe to turn off the Computer" screen, on newer systems the PCs does that automatically.