I presume you deleted the AIPrefs file and the folder with Illy closed.
In some strange cases, it is necessary to Move the folder rather than delete it.
There may be an issue with Font cahces, and certain usual suspects among other applications have a bad reputation of disturbing and confusing Illy.
You can see a list of them, and some other possible troublemaking things, in Other options.
Oh dear. It looks like I have made things much, much worse.
(I did indeed do my deleting with Illustrator closed, and tried moving before deleting)
I opened it up again and did some work. I tried saving my file (in .ai format, variety of shapes, layers, fonts), when it told me that an unknown error occured, then another message that said something like "Can't finish previewing, not enough memory ID=-108", and then it crashed. Turns out that now it doesn't like fonts at all and it isn't too keen on shapes either.
Found the CD. Uninstalled CS2, told it to delete my preferences file but keep the computer activated. Killed Adobe reader while I was at it (haven't reinstalled yet). Looked through my program files for any traces it left behind but didn't see anything (under Program Files>Adobe, and Documents and Settings>Application Data>Adobe). Restarted the computer and reinstalled Illustrator (well, I tried repairing first but that didn't do anything). And nothing has changed. Still can't access the fonts, and now I have errors opening/saving files too. There was another, new error, something something 6654 I believe.
Do you have the option of restoring your PC to a state before things went wrong?
Unfortunately, the Cleaner Tool, which makes sure you get rid of everything after uninstalling, was only introduced in CS3.
If you get the ID = -108 error again, the solution to that particular nastiness is as follows:
1) Open the C:\Program Files\Common Files\Adobe folder and look for a folder called TypeSupport;
2) Create a namesake folder on your Desktop;
3) Move all the contents to the namesake folder.