Bear is mainly right, though I have seen cases (Gateway in particular) where a restore CD might work on a different (but similar) model of PC but only if it's the same manufacturer. Don't ask me how they check who the manufacturer is because I don't know!
So the simple answer is:
Exercising your "downgrade rights" means you should be able to use your Windows ME licence to install your son-in-law's copy of the older Windows 98 Second Edition without getting into trouble, as far as I know (
but this is just my personal opinion and not the opinion of D-A-L.com or its owners).
Pop the Windows 98 restore CD into the CDROM drive. Reboot the PC. With a bit of luck, it will boot from the restore CD and take you through the restore process. If it doesn't boot from the CD and just goes straight into your existing Windows ME, then you need to change the BIOS setting - I believe that there are instructions on how to do this in the Member's PC Help Articles section of the forum.
If you are given an option, you MUST specify that you want to format the hard drive and overwrite everything that is on it.
When prompted to enter the Windows 98 serial number, you need your son-in-law's number as your Windows ME has a different serial number that will not work.
Once it's completed, install the Windows 98 drivers for your machine. You'll probably need to download these off of the Internet or you might be lucky and find that your own Windows ME restore CD has Win98 drivers on. Gateway has recently stopped trading in the UK so I'm not sure whether you can still get drivers from their web site. NOTE: You'll obviously need to check that you can get suitable drivers BEFORE you wipe your PC. You'll also need to save them onto floppy disk or CD (if you have a CD-recorder) so that you can use them after your PC is wiped.
Set up your Internet connection.
Go to Windows Update (icon is at the top of the Start Menu). Choose the Internet Explorer 6 SP1 download (no others at this stage). This is a big download but shouldn't take more than an hour on DSL.
Install your anti-virus software and use its online update facility to get the latest virus detection files.
Run Windows Update again. Download and install all of the security updates up to but not including the latest Internet Explorer cumulative update.
Run Windows Update again. Download the latest Internet Explorer cumulative update and any security updates that have been released since then.
You're now pretty much up-to-date.
Optional extras:
Install any other programs you had installed.
Install Ad-Aware to protect your nice clean PC from Adware, spyware, etc.
Install a firewall program to protect your nice clean PC from trojans, hacking attempts, etc.
Update Windows Media Player to the latest version which is much better -
http://www.microsoft.com/windowsmedia
Update your graphics and sound with the latest version of DirectX if you play games or listen to music on your PC -
http://www.microsoft.com/directx
Final thing - let us know how you got on
P.S. Every time it says "do you want to reboot now or leave it until later?", make sure you reboot - Windows 98 needs it. It's boring and time-consuming but it does help!