Speculating that the problem is corruption in your install — either Photoshop itself, or outside of Photoshop — under System 9, after backing up the data and performing the routine Mac maintenance gballard.net, I would first rule out a simple extension conflict:

• Boot with Mac Base extensions — If problem clears here: Extension conflict.
  We need to find the culprit extension....

Problem no clear with Base Extensions:

• If Photoshop has a conflict with Mac Base Extensions: Sour install.
  We need to find the corruption (see Next).
• Boot with All Extensions Off — If problem does not clear here: Sour install.
  We need to find the corruption (see Next).

Next:

• Purge the current install of Photoshop gballard.net, including the "Adobe Photoshop 6/7 Settings" folder and anything other related items in the System> Preferences folder.
• Next reinstall Photoshop, run all Adobe updaters adobe.com (including Control Panel> Software Update).

Problem no clear:

I would then rule out everything outside of Photoshop by:

• Boot off the OS 9x Install CD.
• Run Apple's Disk Utility gballard.net from the CD OS9.
• Launch Photoshop (from the hard drive).
• Assign ScratchDisk to the hard drive.

If it launches here, booted off the CD, the problem is on the install somewhere outside of Photoshop — the hardware is not the problem (or it would have failed to launch here, too).

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Some people will "Clean Install" the OS at this point to try to clean out the corruption (though I don't recommend Clean Install because chasing corruption is too dang time consuming) — but you may get lucky.

• Clean Install is a feature of the 9x OS Installer CD — it only cleans out parts of the OS.
• That still leaves half the install SUSPECT....
• Only an Initialize StartFromScratch can 100 percent rule out an install.

For help gballard.net with the Mac Operating System (OS).

For more in–depth troubleshooting Photoshop: Troubleshoot Purge Uninstall Reinstall (System 10).

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[Me] I would have Erased and Restored my boot volume at the point where problem didn't clear with Mac Base Extensions.