"Could not initialize Photoshop because the disk is not available."??

I've been happily running Photoshop CS (1) on my Powermac MDD for years.

But today it's acting up.  Here's the problem:  I get the error message "Could not initialize Photoshop because the disk is not available."

I researched this problem and see it's been covered in the thread:
http://forums.adobe.com/thread/370672?start=0&tstart=0

So I trashed the preferences and the SFW prefs also. 
Now Photoshop starts up... BUT as soon as I go into the preferences and assign a scratch disk, it once more fails to launch with the same error: "Could not initialize Photoshop because the disk is not available."

I've tried dragging over copies of the Photoshop utility files from my backup disk... but the same weird behavior persists.

My Scratch disk is on a second internal hard drive.

This all started when I had to reboot from OS9 in order to use my SCSI scanner, which only has a driver from OS9.
I've been using it for years without problem... until today.

Was it because once I saved the file from Photoshop 4 and OS9 to an OSX folder that somehow the preferences got screwed up?

Any clues much appreciated....

jn