OK so.. I tried to delete a file and it said that a process is still using it..
I go into my task manager and kill unknown processes, try again.. same message.
Boot into safe mode, try to delete it... same message

Any Ideas???

well, safe mode was my first bet. If it's a CD image, make sure Daemon doesn't have it mounted (even if Daemon is not running, open it up and make sure to unmount the image). other than that, nothing.

I have this problem trying to delete media, where Windows is loading a thumbnail image or id tags for music. There, I just have to wait a bit before deleting. Desn't quite sound like the kind of problem you're having, but I thought I'd throw it out there anyway.

Get Simple File Shredder, http://www.scar5.com/.

It forces an overwrite of any files, whether their being used or not.

Edit: It's worth noting that anything you delete with this will never come back. Ever.

still no luck.. I think that I may have downloaded a file that didn't exist.. because when I clicked on the link, it said the file didn't exist.. but for some reason, I copied the link straight to my address bar.. and it somehow downloaded... I dunno if that's even possible..

try this

Unlocker

The same thing happened to me a while ago... and I can't remember if I found anything to fix it... It's gone now, which means either A) I eventually fixed it or B) It was so long ago that I've formatted since it happened (I assume that this is the correct hypothesis).

Sorry I'm not much help, but at least you know that you're not the only one that has seen that crap... it f*#$en sucks.

Although I am curious about those file shredders now...

You could attempt to load some type of OS from a CD, or possibly even a basic 98 boot disk. From there just use DOS commands to delete the file.

TrogDOOOOORRR!!! TROGDOOOOORRR!! Burninating undeletable files..