I have similar-sounding power save related problems
on my Dell Latitude XPi P133 portable when on battery:
once power save kicks in I usually lose mouse pointer
and control of the (apparently) active window.

If I Ctrl-Alt-Del at this point I find:

   "Msgsvr32.exe (not responding)"

and if I "End Task" on this everything is usually
back to normal.

But I didn't have this problem before I installed
Internet Explorer 3.02 from CD-ROM.
On installation this upset my video driver and
a few weeks later it orphaned about 27 subfolders
of \Windows: several installations of Win95 later,
I only have a _few_ little problems left :-(

(I think this is a scam by BG to make you see the wisdom
of paying him _more_ money for Win95 on CD so you don't
have to handle all those [expletive deleted] floppies :-)

Is there a good way to force Win95 to update
its software modules without going through
the whole install thing?