enter CURRENT password

I am trying to fix a friend's PC, a gateway 733 with Pentium 3 and Win 98SE. On switching on get the above message, tried to load windows 98 install floppy to update drivers but floppy light stays off - If I try to enter a password, the keyboard seems to not be recognised (It works OK on mine). I have so far, checked all cards and sockets for good connections and checked the system battery which shows 3V. CD drive spins up OK but does nothing else.
If I press F1 to enter setup, it is ignored and the same message comes up.
I feel that it may be a driver problem but unless I can find some way of reinstalling, I end up in an endless loop.
Any advice appreciated.