What firmware are you running. If you are using a network supplied handset then I doubt you have the latest V21. The networks are also delaying (and in some cases blocking) firmware releases. Yet another way the networks make the phones look bad.
If you change the model code to a generic Euro one you can get the firmware when Nokia releases it, not when some faceless/nameless gap year student from the network decides it's okay to issue.
However Nokia do take some of the blame, the firmware updates are supposed to be able to be applied without touching any user data. I have never found my N97 to be particularly happy after this kind of update, so I prefer to do a complete wipe and fresh install. Kinda like your 6 month old XP install needs.
So assuming you've now changed the model number to generic...
Remove any MicroSD. Back up your phone. format the mass storage, do a hard reset. Then update the firmware. Format the mass storage again and hard reset again.
You should then have a totally clean phone. Restore user files/contacts/notes/calendar/bookmarks from the backup. Don't restore device specific settings, they are invariably the one that have got messed up.