It was a while back, but I had a similar problem (hell, I'd get bored and WOULD surf porn, I admit it - though not accusing you of it
). I tried my best to completely uninstall the Internet Explorer program, then did the update from the M.S. website. Pretty sure this solved it for me. That was on a 98 setup too.
Backup your favorites folder, and there shouldn't be any danger of this. IE is pretty imbedded in Windows overall, but I think you can go through the start - settings - control panel - add/remove programs and still get some of it. May also try internet options - security tab - security level. Crank it up and see if that hits it.
Sorry for the guessing, but I know I solved a similar problem on a '98 machine of mine, quite a while ago where I didn't have much knowledge other than clicking and unclicking checkboxes, and I think that or the re-install of just IE was enough to fix it.
As a though, I think the popup killer would work, but it would be just a band-aid, not really solve the problem. They are good tools, but not for repairing something like you've got.
Damn, one more thought - make sure your homepage is set correctly, as a straight http address, and not somehow a link to your old homepage routed through a smut server?
And another - From start - run type msconfig (you probably know all about this). Check under the startup tab and see if there's anything you don't recognize. Ditto for the startup portion of the registry if you're brave, or at least more talented than I am.