When you apply Service Pack 1 for SMS 2.0 to W9x clients, there is a good change that they will become unstable, hanging at logon and during normal use. This will be more prevalent with W95 clients.
The proiblem is caused by the inability of the upgrade package to replace files in use on W9x clients, resulting in some files not being upgraded.
To work around the issue, unintall the client software, and optional components, prior to installing them from the Service Pack 1 media. Verify that the uninstall was successful before proceeding with the SP1 install.
I suggest you read the following Knowledge Base articles:
Q236596 SMS: Client Components Fail to Install with SMS 2.0 SP1.
Q236325 How to Obtain the Latest Systems Management Server Service Pack.
Q238865 SMS: SMSMon32 Process Hangs on Client After Applying SMS 2.0 SP1.
Q237543 Client Upgrade Considerations in Service Pack 1.